Anyone cashed in Inherited Paper I-Bonds?

[PatrickA5]

DW and her sister inherited about $60K in paper ibonds. These will have to be probated, unfortunately.

I've been studying up on the process of the estate Executor cashing in the IBonds (probably at a bank).

Has anybody gone through this process? The treasury website says the administrator needs to take death certificates and something showing administrators appointment by the court to a bank.

I don't know, I just get the feeling that this will be too much of a headache to have the average Bank Teller figure this out.

The alternative is to fill out a form and provide all of the information to Treasury Direct and have the bonds deposited to an account and then sell the I-Bonds. This process could take months.

 

[Winemaker]

The executor of the will can present his "short certificate", which is the proof that he /she needs to cash in the bonds, and a death certificate. Depending on the bank involved, the can cash them at a local branch. In my case, the bank with the estate checking account, did not preform this duty. I had to send in the forms, twice in fact because they lost the death certificate the first time. It took them 11 weeks, to release $220 worth of savings bonds, this past summer.

In another matter, I am waiting for another "short certificate" to be created and forwarded to me because the IRS lost it and the death certificate from last April. It is frustrating.

 

[PatrickA5]

The executor of the will can present his "short certificate", which is the proof that he /she needs to cash in the bonds, and a death certificate. Depending on the bank involved, the can cash them at a local branch. In my case, the bank with the estate checking account, did not preform this duty. I had to send in the forms, twice in fact because they lost the death certificate the first time. It took them 11 weeks, to release $220 worth of savings bonds, this past summer.

In another matter, I am waiting for another "short certificate" to be created and forwarded to me because the IRS lost it and the death certificate from last April. It is frustrating.

What is a "short certificate"? Is this something the supplied by the court?

 

[phil1ben]

I just did this for my father-in-law's estate. We had to probate the estate solely to deal with the I-Bonds. He had four daughters (one was my wife) as beneficiaries who all decided to cash them in despite the interest rate being paid. My wife is the executor and I got voted to do everything because I am a retired lawyer (not an estate attorney......in fact never drafted a Will), among other things. Lucky me........

So we waited for the November 1 interest accrual and I sent in the required paperwork on November 4. Finally received payment on January 20 by direct deposit into the Estate Account. Below is the cover letter identifying the items I sent which should help you greatly:

Treasury Retail Securities Services
P.O. Box 9150
Minneapolis, MN 55480-9150

RE: Liquidating I-Bonds From the Estate of _______________


Dear Madam/Sir

I am the sole executor of the Estate of my father _____________. Included herewith are the following items:

• Signed and Notarized Form 1522 with attached Schedule of _____ I-Bonds sought to be cashed,
• Certified Death Certificate of _____________,
• Certified Death Certificate of _____________,
• Short Certificate of the __________ County Surrogate’s Court naming me as Executor, and
• ___________ I-Bonds with a denomination each of $______.00 (collectively, the “I-Bonds”).

The I-Bonds were issued to _________ (my mother) OR __________(my father) on _____________. My mother died on _____________. My father died on ____________. I was named sole executor of my Father’s Estate on ____________ by the ____________ County Surrogate’s Court.

As executor of the Estate I have determined to sell and liquidate the I-Bonds. The proceeds of the sale should be directly deposited in the _________________Estate Account identified on Form 1522 as soon as possible.

Should you have any questions, please do not hesitate to contact me on the cell phone identified above.

Sincerely,
________________, Executor

 

[PatrickA5]

I just did this for my father-in-law's estate. We had to probate the estate solely to deal with the I-Bonds. He had four daughters (one was my wife) as beneficiaries who all decided to cash them in despite the interest rate being paid. My wife is the executor and I got voted to do everything because I am a retired lawyer (not an estate attorney......in fact never drafted a Will), among other things. Lucky me........

So we waited for the November 1 interest accrual and I sent in the required paperwork on November 4. Finally received payment on January 20 by direct deposit into the Estate Account. Below is the cover letter identifying the items I sent which should help you greatly:

Treasury Retail Securities Services
P.O. Box 9150
Minneapolis, MN 55480-9150

RE: Liquidating I-Bonds From the Estate of _______________


Dear Madam/Sir

I am the sole executor of the Estate of my father _____________. Included herewith are the following items:

• Signed and Notarized Form 1522 with attached Schedule of _____ I-Bonds sought to be cashed,
• Certified Death Certificate of _____________,
• Certified Death Certificate of _____________,
• Short Certificate of the __________ County Surrogate’s Court naming me as Executor, and
• ___________ I-Bonds with a denomination each of $______.00 (collectively, the “I-Bonds”).

The I-Bonds were issued to _________ (my mother) OR __________(my father) on _____________. My mother died on _____________. My father died on ____________. I was named sole executor of my Father’s Estate on ____________ by the ____________ County Surrogate’s Court.

As executor of the Estate I have determined to sell and liquidate the I-Bonds. The proceeds of the sale should be directly deposited in the _________________Estate Account identified on Form 1522 as soon as possible.

Should you have any questions, please do not hesitate to contact me on the cell phone identified above.

Sincerely,
________________, Executor

Excellent! Thanks!

So I guess you didn't try to cash them at a bank first?

 

[Winemaker]

What is a "short certificate"? Is this something the supplied by the court?

Yes. I had to go to courthouse with will, death certificate and picture ID, and EIN for estate, take an oath to follow the law, and the will, to the best of my ability. Of course a fee was involved.

 

[PatrickA5]

I just did this for my father-in-law's estate. We had to probate the estate solely to deal with the I-Bonds. He had four daughters (one was my wife) as beneficiaries who all decided to cash them in despite the interest rate being paid. My wife is the executor and I got voted to do everything because I am a retired lawyer (not an estate attorney......in fact never drafted a Will), among other things. Lucky me........

So we waited for the November 1 interest accrual and I sent in the required paperwork on November 4. Finally received payment on January 20 by direct deposit into the Estate Account. Below is the cover letter identifying the items I sent which should help you greatly:

Treasury Retail Securities Services
P.O. Box 9150
Minneapolis, MN 55480-9150

RE: Liquidating I-Bonds From the Estate of _______________


Dear Madam/Sir

I am the sole executor of the Estate of my father _____________. Included herewith are the following items:

• Signed and Notarized Form 1522 with attached Schedule of _____ I-Bonds sought to be cashed,
• Certified Death Certificate of _____________,
• Certified Death Certificate of _____________,
• Short Certificate of the __________ County Surrogate’s Court naming me as Executor, and
• ___________ I-Bonds with a denomination each of $______.00 (collectively, the “I-Bonds”).

The I-Bonds were issued to _________ (my mother) OR __________(my father) on _____________. My mother died on _____________. My father died on ____________. I was named sole executor of my Father’s Estate on ____________ by the ____________ County Surrogate’s Court.

As executor of the Estate I have determined to sell and liquidate the I-Bonds. The proceeds of the sale should be directly deposited in the _________________Estate Account identified on Form 1522 as soon as possible.

Should you have any questions, please do not hesitate to contact me on the cell phone identified above.

Sincerely,
________________, Executor

Do you know who is going to get the 1099?

 

[phil1ben]

Excellent! Thanks!

So I guess you didn't try to cash them at a bank first?

We had about the same amount as you. I thought by the time that I explained to the customer service rep what an I-Bond was I could complete the paperwork. Our bonds were in the name of my wife's father or mother who both passed. Thus we needed to send both death certificates. Since no identified beneficiary was alive the I-Bonds needed to pass through the Will and the Will needed to be probated. Also not a difficult task.

 

[phil1ben]

Do you know who is going to get the 1099?

I suspect that the 1099 will be issued to the Estate and will be included on the Estate tax return. It would appear that because Treasury Direct took so long to issue payment that we will now need to file a 2023 Estate return. No tax will be due because the Estate was below the threshold.

 

[PatrickA5]

I suspect that the 1099 will be issued to the Estate and will be included on the Estate tax return. It would appear that because Treasury Direct took so long to issue payment that we will now need to file a 2023 Estate return. No tax will be due because the Estate was below the threshold.

Thanks.

I want to avoid having the interest (almost $30K) showing up in the estate.

Like yours, this is the only item that require us to file probate. Also, similar to yours, both people on the bond are now deceased, so we'll have to provide both death certificates.

Right now, I'm probably leaning towards having he IBonds re-issued in DW's name (will have to be at Treasury Direct) and holding them. I believe we can do that and still postpone the interest until the bonds are ultimately redeemed. I guess DW can pay her sister her 50% share less the taxes we'll have to pay down the road.

Ugh! What a mess. All because FIL didn't update the beneficiary on the Ibonds. I asked him to do that multiple times, but a "buddy" of his said it wasn't necessary.

 

[Rianne]

OP paper I-bonds are a different animal. We have them in our lock box from the early 2000s. Yes, the interest is great but if we pass on, we'll leave a mess for our beneficiaries. The value is $100K+. We're thinking of cashing them and paying the taxes on the interest. They will go to probate and create a hassle, take forever, and be costly to our beneficiaries if we leave them. If we cash them, it will leave more to them from our portfolio.

Once you have names on paper bonds, you cannot create beneficiaries as easily as on tIRA or in a trust. DH and I are on the bonds as and/or if one of us dies. There is no lengthy beneficiary form. Treasury Direct is a hassle in itself. I'd rather cash them at the local brick and mortar bank where the lock box is.

 

[MarieIG]

Good template Phil1ben. I'm sure it can be used by others in addition to OP. (No inherited I bonds - but some e-bonds maturing in 2025.)

 

[PatrickA5]

OP paper I-bonds are a different animal. We have them in our lock box from the early 2000s. Yes, the interest is great but if we pass on, we'll leave a mess for our beneficiaries. The value is $100K+. We're thinking of cashing them and paying the taxes on the interest. They will go to probate and create a hassle, take forever, and be costly to our beneficiaries if we leave them. If we cash them, it will leave more to them from our portfolio.

Once you have names on paper bonds, you cannot create beneficiaries as easily as on tIRA or in a trust. DH and I are on the bonds as and/or if one of us dies. There is no lengthy beneficiary form. Treasury Direct is a hassle in itself. I'd rather cash them at the local brick and mortar bank where the lock box is.

I agree they are a hassle. That's why I sold mine a few years ago.

My dad had over 100 Series EE paper bonds (all at $50). When my mom passed away I went through the hassle of gathering them all up, filling out a form and sending them to the Treasury to reissue with me as a POD. Took about 4 months. They all matured and were cashed in over the next several years.

Now, we're dealing with FIL's bonds. We'll have to file probate, then file two separate forms (1455 and 4000) and package everything together and mail to the Treasury. Maybe 4 months later, we'll have bonds in DWs name at Treasury Direct and then will probably sell them. This is the only probate item, so it created a huge hassle that didn't need to be.

 

[PatrickA5]

I just did this for my father-in-law's estate. We had to probate the estate solely to deal with the I-Bonds. He had four daughters (one was my wife) as beneficiaries who all decided to cash them in despite the interest rate being paid. My wife is the executor and I got voted to do everything because I am a retired lawyer (not an estate attorney......in fact never drafted a Will), among other things. Lucky me........

So we waited for the November 1 interest accrual and I sent in the required paperwork on November 4. Finally received payment on January 20 by direct deposit into the Estate Account. Below is the cover letter identifying the items I sent which should help you greatly:

Treasury Retail Securities Services
P.O. Box 9150
Minneapolis, MN 55480-9150

RE: Liquidating I-Bonds From the Estate of _______________


Dear Madam/Sir

I am the sole executor of the Estate of my father _____________. Included herewith are the following items:

• Signed and Notarized Form 1522 with attached Schedule of _____ I-Bonds sought to be cashed,
• Certified Death Certificate of _____________,
• Certified Death Certificate of _____________,
• Short Certificate of the __________ County Surrogate’s Court naming me as Executor, and
• ___________ I-Bonds with a denomination each of $______.00 (collectively, the “I-Bonds”).

The I-Bonds were issued to _________ (my mother) OR __________(my father) on _____________. My mother died on _____________. My father died on ____________. I was named sole executor of my Father’s Estate on ____________ by the ____________ County Surrogate’s Court.

As executor of the Estate I have determined to sell and liquidate the I-Bonds. The proceeds of the sale should be directly deposited in the _________________Estate Account identified on Form 1522 as soon as possible.

Should you have any questions, please do not hesitate to contact me on the cell phone identified above.

Sincerely,
________________, Executor

Thanks again for this. I used your cover letter, changed a few things, and will mail it to Treasury one DW is assigned adminstrator by the court.