Executor's options
Tuesday, March 22nd, 2005
Categorized as: Inheriting and bequeathing US Savings Bonds
Can the Executor of an estate choose to cash in and pay taxes on a partial amount of a bond inventory?
Tom's response
Yes, you can cash have the estate redeem some and pay the tax on those and let the rest pass on to co-owners or beneficiaries. There is also a way to pay all the taxes on the decedent's final tax return and pass the uncashed bonds on to the heirs.
The process, forms, and best strategies for an Executor to use to save the family money are complex. If the estate has more than $10,000 in Savings Bonds, it will pay you to spend a weekend reading my book. The chapter on issues with inherited Savings Bonds will show you the most efficient and least expensive path through the maze.
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When my grandmother died we learned that she had 6 I-bonds, 3 for each son POD to the other son. My father was acting as the administrator of her estate, but he died before her estate was settled. My uncle took over, and when the estate was settled, the 3 bonds that were intended for my father came to me, as sole beneficiary of his estate. When I tried to cash the bonds, I ran into a problem. The bonds have a note that reads "POD ". As the administrator of my father's estate, should I be able to cash these bonds? What do I need to do?
Hi Nancy - because of the way the bonds were registered, they belong to your uncle.
The bonds never belonged to your grandmother and should not have been included in her estate (I doubt they were).
Although she put up the money and had possession of them, your father was always the owner of the three bonds with his name on them. When he died, the POD ("payable on death" or beneficiary declaration) made his brother the owner of those bonds.
You do have to include the bonds in your father's estate for estate-tax purposes, but only your uncle (or his heirs) can cash the bonds.
Tom Adams
My daughter was given a series ee bond by her grandmother. The bond was in her grandmother's name and her name. Her grandmother is deceased. Will she have any problems cashing it?
Oscar - If the word "OR" appears their names, your daughter can cash it easily. If the word "POD" (payable on death) appears, she will need a copy of her grandmother's death certificate.
Tom Adams