savings bonds

Three Savings Bond Beneficiary Facts

Posted on October 12, 2017

The word Beneficiary or POD (paid on death) printed on paper bonds essentially means the same thing.

Here are three important facts to know:

1. Beneficiaries cannot cash in bond(s) until after the death of the primary owner. Beneficiaries must show proof of the passing of the primary owner (normally a death certificate) when redeeming. Call the bank or financial institution to learn what documents they required, and daily maximum redemption amounts.

2. A beneficiary does NOT have to cash in the bond(s) in a specific time frame after the death of the primary owner.

3. Most financial institutions will issue a 1099-INT – either on the spot or within the first two months of the following year – for all of the interest earned for each bond – REGARDLESS if interest had already been reported by the primary owner. They will likely use the social security of the person who redeems the bond.

IMPORTANT: While not a common practice, it would be wise to determine if the owner of the savings bonds has already reported annual interest earned on any prior years tax returns. If so, obtain all the tax returns for the applicable years that the annual interest earned was reported to avoid a potential “double taxation” situation.

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