What to Do With All of Those U.S. Savings Bonds

United States Savings Bonds have been around since 1935 and have evolved from the Series E Bond, which contributed billions of dollars to finance World War II, to the electronic versions of Series EE and Series I bonds that we have today.  Prior to January 1, 2012, you could still buy paper Savings Bonds from a financial institution.  While many of our clients have experience with the paper Savings Bonds in that they either own individual paper Savings Bonds that they have accumulated over the years, or they have administered an estate where paper bonds comprised some of the estate’s assets, all Savings Bonds must now be purchased online through the Treasury Department’s web-based system, TreasuryDirect.  While the process has been described as “clunky,” there are many things you can do with a TreasuryDirect account.  You can purchase, manage and redeem Series EE and Series I electronic bonds; convert Series EE and Series I paper bonds to electronic bonds; and purchase electronic savings bonds as a gift.  So how does TreasuryDirect work and how can it make things easier for ourselves and our loved ones?

            Assume you are the holder of 50 Series EE paper bonds, none of which have a joint owner or a named beneficiary.   When you pass away, your Executor will need to know where the bonds are located.  If your Executor wishes to simply cash the bonds in, they will need to complete FS Form 1522[1], which will require the Executor to list the issue date and serial number of each individual bond, provide direct deposit instructions, and sign the form in the presence of an authorized certifying officer who can only be found at a financial institution.  Certification by a notary is not acceptable.  The Executor must then submit the original form, a certified copy of the letters of appointment, a certified copy of the death certificate and each original bond the Executor wishes to cash.

            Not only does the existence of paper bonds make the administration of your estate a little bit harder on the Executor, but you also run the risk of some or all of your bonds becoming lost, stolen or damaged.  The benefits of converting paper bonds to electronic bonds other than for safer keeping include (1) being able to access the account at any time and see real-time values for the bonds; (2) being able to change beneficiary designations; and (3) proceeds from the automatic sale of maturing bonds being directly deposited into your bank account.  If any of this sounds appealing, click on this link for step-by-step instructions for opening a TreasuryDirect account.

            Once you have been assigned an account number, you will be able to log-in using the account number and the password you selected.  You will receive a one-time passcode via email.  From there, go to ManageDirect and click on the link “Establish a Conversion Linked Account” which appears in the “Manage my Linked Accounts” menu.  When you click on the link, you will be presented with a page that provides information and a button – click the button to create your Conversion Linked Account.  When you do so, the Account Info page in that account will be displayed.  Click on the ManageDirect tab where you will see a menu titled “Manage my Conversions.”  From there, click on the “How to Convert my paper bonds” link.  This will give you step-by-step instructions for the rest of the process. 

            At this point, you will gather all of your Series E, EE and I savings bonds and sort them by the names and connectors (“OR,” “POD,” or “beneficiary”) on them.  Presorting the bonds in this way will make it easier to enter the information requested.  If you need to get back to your Conversion Linked Account at another time, you’ll see it as “My Converted Bonds” in the account listing under “Linked Accounts Information” on your primary account summary page.

            Once you have opened a TreasuryDirect account and converted your paper bonds into electronic bonds, you can then transfer those electronic bonds into your Revocable Living Trust. You do this by opening another account in TreasuryDirect as an “entity” rather than an individual.  Then, when you next log-in to your account, you will click the ManageDirect tab and then click “Transfer Securities” under the heading Manage My Securities and follow the instructions.  In some instances, you will be required to complete FS Form 5511 in order to complete the transaction.  Similar to the bond cashing requirements, you will need to sign this form in the presence of an authorized certifying officer.   

[1] https://www.treasurydirect.gov/forms/sav1522.pdf

Ask Winston: Resolutions for Our Humans

Hook Law Center: What are some resolutions for the New Year that you wish your owners would make?

Winston:

1. Put the cell phone away during walks with me so we can connect and build our relationship.
2. Try a new activity with me like Frisbee.
3. Make a plan for who will take care of me if something happens to them.  Virginia law allows a pet owner to create a trust for the care of an animal.  Funds from the trust can be used to help the beneficiary of your pets to pay the expenses associated with owning your pet.  Fortunately, unlike other trusts created by a Will, the trustee of the pet trust will not have to file accountings or be bonded unless a court orders otherwise or the trust document requires it.
4. Make a plan for a medical emergency by putting some money aside in a pet emergency fund or buying pet insurance.