I Bonds Beneficiary vs Secondary Owner in TreasuryDirect (2024)

FAQs

What is the difference between a second owner and a beneficiary I bond? ›

Upon the death of either the primary or secondary owner, the survivor will be considered the sole owner of the bond. Beneficiary: Only the owner may cash the EE or I Bond during his or her lifetime. The beneficiary automatically becomes the sole owner of the EE or I Bond when the original owner dies.

You can then add either a secondary owner or beneficiary. Once you have a TreasuryDirect account, you can convert other paper bonds you own to electronic bonds.

Second-Named Registrant - The second person named in the registration of a security held in TreasuryDirect. In the example, "John Doe SSN 123-45-6789 WITH Joseph Doe SSN 987-65-4321," Joseph Doe is the second-named registrant.

If a surviving co-owner or beneficiary is named on the savings bond, the bond goes directly to that person. It does not become part of the estate of the person who died. If you are the named co-owner or beneficiary who inherits the bond, you have different options for paper EE or I bonds and paper HH bonds.

As the account owner, you control the money, and you can add, modify or remove beneficiaries at your discretion. Beneficiaries have no ownership or right to the funds in the account while the account holder is alive. You can have multiple beneficiaries and allocate different percentages to each one.

If you have either two owners, or a beneficiary name on the bond, then if one dies the other owns the bond. The difference is that a co-owner has the equal right to cash in the bond at any time.

If the beneficiary has a TreasuryDirect account, the security will be transferred to that account. If the beneficiary does not have an account, he or she may establish an account. Alternatively, a beneficiary named on a savings bond may request redemption.

If the executor doesn't include predeath interest on the decedent's final return, then the beneficiary owes federal income tax on all pre- and post-death interest on the earlier of the bond's maturity or redemption.

To do this, you must register ownership of the securities in "beneficiary" form. You simply register ownership in your name, followed by the words "payable on death to" and the name of your beneficiary. The beneficiary must be a person, not an organization.

You must be the owner or, if you are married, you may make yourself and your spouse the owners. To use the exclusion, the child may be a beneficiary but cannot be the owner or co-owner of the bond.

Can I cash my deceased parents' savings bonds? ›

TO CASH BONDS FOR A DECEDENT'S ESTATE:

Series EE, Series E, and Series I bonds can be cashed at a local financial institution. Some of these transactions may have to be forwarded for further processing. Series HH and Series H bonds must be sent to one of the addresses shown at the bottom of the following page.

You can skip paying taxes on interest earned with Series EE and Series I savings bonds if you're using the money to pay for qualified higher education costs. That includes expenses you pay for yourself, your spouse or a qualified dependent. Only certain qualified higher education costs are covered, including: Tuition.

When the owner of a U.S. savings bond dies, the bond will often need to go through probate before it's transferred to the inheritor. However, the bond won't need to go through probate if it was registered (1) with a co-owner or (2) with a named beneficiary.

You can only cash bonds that you own or co-own unless you have legal evidence or other documentation that we accept to show you are entitled to cash the bond. How do I know how much my bond is worth? Use our Savings Bond Calculator.

A beneficiary, instead, is someone on your account who cannot access an account unless the account holder passes away. Unlike a joint account owner, they do not have the same permissions and cannot do anything while the account owner is alive.

Inheriting I Bonds

The executor of the decedent's estate can choose to include all pre-death interest earned on the bonds on the decedent's final income tax return. If this is done, the beneficiary reports only post-death interest on Form 1040 when the bonds mature or are redeemed, whichever comes first.