Adding a co-owner or beneficary to a Savings Bond registration
Wednesday, July 21st, 2004
Categorized as: Savings Bond registration changes
Adding a co-owner or changing the beneficiary of a Savings Bond never causes a taxable event, so it's a simple case to deal with:
- Forms:
- For electronic Savings Bonds at Treasury Direct, you can manage the registrations online. See my post Changing the registration in Treasury Direct for more information.
- For paper Savings Bonds use Public Debt Form 4000.
- Warnings and Cautions:
- You must sign the form and your signature must be certified by a bank - don't sign the back of the Savings Bonds themselves
- The Treasury won't reissue paper bonds to update an address or to change denominations unless a bond is being split between heirs or parties to a divorce
- Changing the beneficiary on the older and no longer issued Series E or Series H bonds requires the consent of the current beneficiary
- A new co-owner must be related to you by blood or marriage
- Keep in mind that a Savings Bond registration can have only a co-owner or a beneficiary, not both
- Without creating a taxable event, the first-named or principal owner of a Savings Bond can:
- remove or change the beneficiary
- remove the beneficiary and add a co-owner
- Paper Series I bonds do not allow the following changes to living owners except in the case of divorce; however these changes are allowed and not taxable events with all electronic Savings Bonds and with all paper Savings Bonds except Series I:
- remove or change the second-named owner or co-owner
- remove the co-owner and add a beneficiary
Rate this post (1 to 5 stars): 
(Average rating: 5 stars)
(Average rating: 5 stars)
Loading ...
I buy savings bonds for my grandchildren as birthday gifts. Should I list the parent as co-owner or as beneficiary? Are there any tax ramifications when the bonds are cashed regarding co-owner or beneficiary? Also, some of my grandchildren are over 21 now - should the parent be co-owner or beneficiary on their bonds? I don't know my grandchildrens' SS#'s so I use the SS# of the listed parent. Is that OK? I also have a granddaughter with Down's Syndrome who will be 18 this Fall and her parents will become her legal guardians. Should I list a co-owner or beneficiary on her bonds? Thanks.
Zoe Ann - All of these registration possibilities exist because each of them is right for someone. I can't advise you which is best for you without knowing more about your specific wishes.
In general, making a parent a beneficiary would make things a bit easier in case one of the children dies, but the parents would inherit the bond with or without a beneficiary or co-owner designation.
Making a parent a co-owner gives the parent more control and the child less control over the bond than making the child the sole owner. Some people prefer to take the control out of the hands of the parent and some prefer to put it into the hands of the parents. In any case, a parent can sign for a minor child and cash the bond whether you want them to or not.
Your granddaughter with Down's Syndrome probably isn't able to handle her own financial affairs, so those bonds are a special problem. While a fiduciary or voluntary guardian can file special forms to cash her bonds, you have to judge how much you trust her fiduciary. It can be a great simplification to make the fiduciary a co-owner of the bonds if the fiduciary has your trust.
The SSN on the bond is used only to track the bond in case it is lost. If these gift bonds are lost and your children or grandchildren need to have the Treasury search for them, it's much better to have the child's SSN on the bond; if people think to look for them under a second SSN at all it will be yours - the giver of the bonds - not their parent's.
The only tax angle is that the interest may be tax deductible if the children go to college. However, for that to work, the bonds have to be in the name of the parent. If the child (or you) is owner or co-owner, the tax deduction isn't available. The child could be the beneficiary.
Tom Adams
Hi
I need to know what to do. My daughter who is 13 now was given a series EE savings bond at birth in 8/1994 for $50.00. This bond was actually listed with her name but her father's social security no. This has never been changed. We have lived in Australia for over 12 years and I am divorced from her father and she lives with me and has basically no contact with her father.
What can I do from Australia to get this sorted out to reflect all her details etc so as when this matures she can cash it in.
Hi Jennifer - it's typical with gift bonds for the SSN and person not to match. It won't prevent your daughter from being able to cash it. You'll also be interested in our post on cashing Savings Bonds internationally.
Tom Adams
We have 5-$100 EE Savings Bonds that I purchased and, not knowing better at the time, they are only in my estranged son's name. Can I add myself as co-owner and cash these bonds? Is there any other way to cash these bonds?
Hi John - Your son is the sole-owner of the bonds. Just as he can't add himself as co-owner to your bonds, you can't yourself as co-owner to his bonds (even if you gave him the bonds).
Tom Adams
I have a number of EE Bonds issued in 1986. Is there any way I could add my daughter's (or Grandson who is in college)name as a co-owner of the bonds?
I have several E bonds, some of which have been matured for approx. 11 yrs now. What are the penalties for not cashing them in until now, and how do I go about doing so?
Murray - Yes, there is a way you can add someone as a co-owner. Download the form mentioned on this page (Public Debt Form 4000) and just read and follow the instructions printed on the form.
John - The penalty you're paying is 11 years of lost interest, which is huge. There is no penalty to cash these - but there's a penalty every day for holding them. For more info on how to redeem them see how to cash in a Savings Bond.
Tom Adams
My mother who expired 2005 and myself were joint in the bonds. I want to change bonds back to my legal maiden name and designate my niece and nephews as beneficiaries bonds purchased in 1977, 1978 and 1979 and ….. How can I also find out value of these bonds. Thank you.
Hi LynnMary - there's a link to the form you need to make the registration changes in the information at the top of this page. Include a copy of your mother's death certificate so that the changes aren't processed as a taxable event. Also, at the top right there's a Savings Bond Calculator that will tell you what your bonds are worth.
As a co-owner of my EE Bonds may my daughter use the Bonds to pay for her son's (my grandson's) college tuition?
Hi Murry - in the context of the Savings Bond education deduction, if there is a co-owner, it must be the spouse of the person taking the deduction. Here's complete information on the Savings Bond education deduction.
Tom Adams
I want to help my sister pay off her mortgage before she retires so I was considering giving her approximately $60,000 worth of my EE bonds. I understand that I can do this by having the bonds reissued naming her as a co-owner with me. We've agreed that she will be responsible for the Federal income taxes due when she cashes the bonds in within the next two years. Are there other tax liability considerations that I am not aware of, such as would this transfer via a reissue be subject to Federal gift tax provisions? Thanks for any help you can give me.
Hi John - The Treasury doesn't consider adding a co-owner to a Savings Bond registration a taxable event. Moreover, the Treasury tells banks to use the Social Security Number of the co-owner cashing the bond on the 1099-INT that reports the interest income to the IRS. So from the Treasury's point of view, what you're suggesting will work.
However, you should know that from the point of view of the IRS, you are still the principal owner and the one who owes the tax. For more info, see my post Who pays the taxes?
As for gift tax, at this point you would need to file a form because the gift is over $10,000. Whether you would actually ever owe any gift tax depends on the size of your estate. For more info, see my post Savings Bonds and gift tax.
Tom Adams
Is there any way to avoid the huge taxes on a $1000 bond purchased in Oct. 1986 if I give the bond to my daughter or her son(my grandson) who is attending college?
Hi Murray - you asked this question yesterday and I answered it on the Savings Bond education deduction post.
Hi, I purchased several savings bonds in my name but with my son as the beneficiary. Several years ago my son passed away. My son was never married nor had any children. At this time i do not wish to add new beneficiaries to the bonds. Do I need to get the bonds re issued to be in my name only? If I don't have them re issued and I die would they automatically go into my estate if I were to die without removing my son as the beneficiary?
Hi John - you aren't required to remove the name of a beneficiary who has died.
Legally, the bonds are now sole-owner bonds and you're the owner. If you die, they will go into your estate with the rest of your assets and be distributed according to your will.
Tom Adams
NOV.6th answer to question you used old Gift Tax
amount of over $10,000 which shoud be over $12,000 per year.
What do I need to do to change the beneficiaries of my EE and I bonds?
Hi Rodney - Assuming we're talking about paper rather than electronic bonds, just fill out Public Debt Form 4000 as described above.
Tom Adams