My Mom said she wants to leave me some US bonds when the time comes.Can she do that in a will or should she transfer them? Thank you .
Terry Says: She should go to TreasuryDirect.gov http://www.treasurydirect.gov/NC/FoRMSHome?FormType=SBF&site=indiv and order Form 4000 to add/change a beneficiary for each bond. Then when she passes on, the bonds will go directly to each of you. She can opt to have the bonds included in her estate, at the value on the date of death. Assuming her estate is under $5 million, then there would be no estate tax. And you, as beneficiaries, wouldn’t have to pay taxes on the interest that has accumulated since she purchased the bonds.
If instead, she gifts them to you, she will have to pay tax on the interest that has accumulated until the date of the gift. Plus, that extra “income” could impact her other benefits, such as the cost of Medicare premiums, or even taxes on her Social Security benefits if the amount is significant. AND, it’s entirely possible that if these are older bonds she will want to keep them as long as they keep earning interest, because they likely have a very high and attractive “floor” rate, whether EE or I bonds. That’s another reason to hold them as long as possible if they continue to earn interest. To find out what the bonds are worth, and what the “floor” rate is for each bond, go to this link: http://www.treasurydirect.gov/indiv/tools/tools_savingsbondcalc.htm