Inherited I Bonds

[lawman]

My wife (Tam) and I (Billy) have seperate Treasury Direct accounts.. Both accounts have nothing but I Bonds..Some are registered Billy OR Tam and some are registered Billy WITH Tam. Some are registered Tam WITH Billy and some are registered Tam OR Billy..As I understand either can redeem all bonds but when we are both gone and my daughter who is the beneficiary inherits them what happens? Also I noticed my wife's social security number is missing on some..Is that a problem?

 

[joesxm3]

There is no stepped up basis on inherited I-Bonds. Beneficiary has to pay taxes.

You can specify a beneficiary and they can avoid probate with a death certificate and proof of identity. Maybe you did that already?

 

[lawman]

There is no stepped up basis on inherited I-Bonds. Beneficiary has to pay taxes.

You can specify a beneficiary and they can avoid probate with a death certificate and proof of identity. Maybe you did that already?

What will the beneficiary do with the death certificate? Will she need to have a TD account?

 

[joesxm3]

According to Grok the beneficiary must open a TD account and they upload the death certificate and ID proof via TD secure upload and then the I-Bonds get transferred to their account.

 

[RetMD21]

I've been wondering about redeeming my I bonds. They seemed like a good idea at the time but it's a small account for me and a potential headache for heirs

 

[GrayHare]

There is no stepped up basis on inherited I-Bonds. Beneficiary has to pay taxes.

Another option is for the estate to redeem some or all, followed by, at tax time, deducting estate expenses from the bond interest.

 

[PatrickA5]

When the first of you dies, the remaining spouse should add a beneficiary. My FIL had multiple paper I bonds, but didn't add DW when MIL died. Some guy in his coffee group said it wasn't necessary. Well, it ended up costing us $4,500 to open probate and 6 months for treasury to change the ownership to DW and sell the bonds. Moral of the story, keep beneficiaries up to date!

 

[RetMD21]

Yikes, do you have to add the beneficiary to each bond?

 

[joesxm3]

Per Grok. It would seem that you have the "flexibility" of having to specify the beneficiary bond by bond, not at the account level.

 

[RetMD21]

I haven't done much with my TD account despite having it ever since they issued some sort of code card for 2 factor. Last year I finally moved my paper bonds to TD and this week I consolidated that account with my main account. I have a lot of bonds that will be maturing around the same time. I should probably redeem some early to smooth out taxes.

 

[Mulligan]

Yikes, do you have to add the beneficiary to each bond?

There are directions on TD for this. It wasnt too hard. All of my various IBonds are designated POD to my lady. When I bought more I had to update those to POD also.