Using Savings Bonds to avoid the cost of probate court

Once a Savings Bond is purchased, can you go back and list a co-owner? At my death, would this avoid having the Savings Bonds end up in court and go through the cost of probate? I just want to keep it simple and maybe make my two sons equal co-owners.

Tom's response

Savings Bond registrations can only have two names on them, so you can't make yourself owner and your sons equal co-owners. However, you can put one son's name on half your Savings Bonds and the other son's name on the other half.

If the bond denominations are evenly splittable, the fairest way to do this is to have each bond reissued as two separate bonds - one naming you and the first son, the other naming you and the second son.

You can make your sons either co-owners or beneficiaries. You can do it either when you buy the bond or anytime thereafter. A co-owner can cash a bond anytime; a beneficiary can cash a bond only with the owner's death certificate.

Both registration types avoid the costs of probate, but there is no way to register a Savings Bond registration that avoids state or federal estate tax, if any should be due. This depends on the size of your estate.

For more information about Savings Bonds and probate court, see my post Savings Bonds, estate planning, living trusts, and avoiding probate.

For more information on how change the registration on your bonds, see my post Adding a co-owner or beneficiary to a Savings Bond registration.