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Lessons in the Law August Report

August 18, 2022

Savings Bonds

So many of us like to talk about things from the past. This article memory is about US Savings Bonds. I remember buying stamps at school and when you had enough stamps on the official bond card you would exchange the card for a US Savings Bond. I also remember my dad receiving bonds from the US Steel payroll plan.

Why am I talking about US Savings bonds? I am finding that many clients are now finding these bonds belonging to their parents or even their own bonds. These bonds are often hidden in the back of drawers or hidden in a secret place. These bonds are still valuable, however some of them may not be paying any more interest.

If you and or your parents have these old US savings bonds, now is the time to value these bonds and begin a process of liquidating the bonds. You will need a strategy on how and when to cash the bonds because of the accumulated taxable interest. I just spoke with a client who just found over eighty thousand dollars of uncashed bonds. It is a great find for the family, but an estate has to be opened in order to cash the bonds and there will be a significant tax obligation. With prior planning we could have eliminated the probate process and reduced the tax liability.

Now is the time to value your bonds and determine a strategy to cash them and do some tax planning. You may need to discuss these issues with your attorney, accountant and tax preparer.

There are special tax rules in effect in some cases. For more information on liquidating US Savings Bonds, you can go to the government website. There you can value the bonds and determine how much interest the bonds will generate for taxable income.

Atty. John J. Urban

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