Re-registering US Savings Bonds to LIving Trust

[LARS]

Anyone have experience with re-registering savings bonds from an individual to a living trust?

I have reviewed Public Debt Form 1851, but was looking for any real world tips. Situation is transferring savings bonds from father into living trust of father and mother with three beneficiaries. My main concerns are getting beneficiaries correct and not having a taxable event.

Situation is made more complicated by the fact that any changes need to be made using a Durable Power of Atty for father.

Thanks for any help.

 

[Nords]

My main concerns are getting beneficiaries correct and not having a taxable event.

I think anytime you re-register a bond you incur a taxable event, but perhaps PDF-1851 is different going to a living trust.

You've probably already looked at TreasuryDirect.gov?
Individual - Replacing or Reissuing EE/E or I Savings Bonds
TreasuryDirect Help: Learn More About Entity Accounts

Maybe you don't need to do anything. The living trust helps avoid probate and minimize estate taxes. If everything else is already in the trust, do you need to jump through the hoops of getting the bonds in the trust? If they're not in the trust then it's possible they could be subject to probate (or maybe not) and even outside the trust they may not be subject to inheritance taxes at the fed or state level. The beneficiaries could be handled by will or by adding their names to the bonds.

One of our ancestor stories is the great-grandfather who, on his deathbed, insisted that the family savings bonds be changed to his daughter's name. (He never trusted the government's "commissars".) She dutifully complied with three shopping bags full of bonds that had been purchased from the 1920s to the 1960s. In her ignorance she thought that taxes had to be paid, and they were impressive. When she reported "mission accomplished" to her father, he relinquished his grip on life and passed on a few days later. It was months before she learned she could have done nothing at all (and let them pass through probate) or found a way to retitle them. To this day she's still ticked about the taxes she paid.

 

[BOBOT]

We did this in 2003. We bought our I-bonds in individual name because back then we could charge the purchase to a credit card and get cash back from the cc company! After we had the paper bonds in hand I called the local (Richmond) Fed, talked to a nice lady who sent the appropriate paperwork, which we filled out, & they re-issued the bonds in Trust name. No sweat, as I recall.

 

[kaneohe]

I think anytime you re-register a bond you incur a taxable event, but perhaps PDF-1851 is different going to a living trust.

You've probably already looked at TreasuryDirect.gov?
Individual - Replacing or Reissuing EE/E or I Savings Bonds
TreasuryDirect Help: Learn More About Entity Accounts

Nords,

Below is a quote from a link from your link (last paragraph).
Sounds like not all reissues are taxable:
***************************************************
Reissued I Bonds

In some cases, when you have your savings bonds reissued, the transaction will be considered a reportable event for federal income tax purposes.

These events include:

The name of a living owner or principal co-owner doesn't appear on the reissued bond.
The name of a surviving beneficiary or other person entitled to ownership doesn't appear on the reissued bond as owner or principal co-owner.
The principal co-owner is presumed to be responsible for reporting any interest for federal income tax purposes.

For taxable reissues, the person giving up ownership of the bonds will be sent an IRS Form 1099-INT shortly after the end of the tax year. This form will show the interest earned to the date of the reissue transaction. If the form shows interest earned and you have deferred reporting interest, you report interest earned on those bonds as income on your taxes for the year the reissue occurs.

The new owner or principal co-owner of the reissued bonds is responsible for interest earned after the date of the reissue transaction. More information and full instructions can be found in IRS Publication 550, Investment Income and Expenses.

 

[Nords]

Sounds like not all reissues are taxable:

Concur, but this is so fraught with exceptions that I hesitated to make a unilateral declaration.

Here's another exception: we own a few EE & I bonds for education, properly titled & purchased and in compliance with all the education-bond requirements-- EXCEPT that they can only be redeemed tax-free when used to pay for tuition educational expenses and not "extras" like room, board, and misc fees.

So when our kid got her NROTC scholarship (they pay tuition & fees) then I could no longer redeem the education bonds tax-free for educational expenses. Not that I'm complaining; I would have happily cashed them in and paid my taxes.

EXCEPT that I later figured out we could redeem them tax-free by rolling them over to a 529 account, which can be spent on educational expenses other than tuition/fees.

So in other words I couldn't use the bonds tax-free for education, but I could launder them through a 529 to use them tax-free for education.

Pretty intuitive, no?

So yeah, you're right, lots of fine print to read & comply with after checking with a tax lawyer and a CPA.

I've started up nuclear reactors with less paperwork...