Were you gifted paper savings bonds as a child? Did you find a box of T-notes you misplaced years ago stored in a safe deposit box? While these paper bonds make for fun memorabilia, their physical form presents challenges in an increasingly digitized society. The US Treasury expects you to convert your bonds to digital. Failure to do so creates a great deal of expense and difficulty during estate administration.
Since 2002, the US Treasury has encouraged would-be bondholders to buy their bonds and other Treasury securities online. In 2012, the agency phased out most paper bond purchases entirely. If you are one of the many Americans still holding on to their paper Series EE or I bonds, consider the advantages of converting them to an electronic format.
- Safety. When you convert your bonds using the TreasuryDirect program, your bonds are no longer at risk of getting lost, stolen or destroyed.
- Convenience. You have access to your digital bond information 24/7. You can use TreasuryDirect to check their value and maturity. Upon maturity, banks may restrict the amount you can redeem, charge processing fees, or refuse to offer the service entirely. While paper bonds may only be cashed in full, electronic bonds can be partially redeemed free from processing fees.
- Tax and retirement planning. Accessing your balance at any point gives you flexibility for tax and retirement planning. You may use this information to consult with your financial planner or estate planning attorney to discuss the tax impact of cashing the bonds now or when they mature.
- Estate planning ease. Add or change the name of a co-owner or beneficiary online and without the hassle of sending in paper forms. If you pass away before cashing all your bonds, any Treasury notes with co-owners or surviving beneficiaries will not pass through Retaining bonds in an electronic format also helps ensure that your heirs will not forget about these valuable assets.
Wool Landon is here to help you with your estate planning and will be here to help your loved ones through probate administration.
Paralegal Teagan Roberts also contributed to this blog.