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Savings-Bonds-Alert: Do savings bonds become worthless when the owner dies?

Thursday, January 13, 2005

Do savings bonds become worthless when the owner dies?

My aunt recently presented me with several savings bonds she purchased about 25 years ago. They are made out to her or me, but her social security number is on them while mine is not. Somebody told me that without my social security number on the bonds, I can't redeem them. They said I have to get her to redeem them, or once she dies, they become totally worthless. Is this true? Tom's response Whoever you talked with was what I refer to as a fountain of misinformation. If the bonds say "OR" between your name and your aunt's name, rather than "POD" (payable on death), you are the co-owner and you can redeem them either now or after her death. A 1099-INT tax form will be issued to whoever redeems the bonds, reporting the interest earned to the IRS. This form is always issued in the social security number of the person cashing the bonds. The social security number that actually appears on the bonds is used mostly for tracking purposes, in case the bonds are lost. Savings bonds never become worthless. The value passes on to the heirs of the owner. For more information about the rules governing how savings bonds pass to heirs, see our page on inheriting savings bonds. --

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