How to Cash Series EE Saving Bonds when One of the Owners Have Died

Over the years, my children have been the recipients of multiple Series EE Savings Bonds. Instead of getting cash for their birthdays and other holidays, Grandpa used to buy them Series EE US Savings Bonds.

Series EE savings bonds are low risk, safe, secure government backed loans that used to be a popular way to save money for college, and first car, or a down payment on a house. To buy a savings bond, a person fills out an order form at his bank or credit union, plunks down some cash, and then waits for the bond to arrive in the mail some 4-6 weeks later.

When it comes to buying bonds for kids and grandkids, the process is just the same except that as well as writing down our name & social security number, we also list our children's names and address as the recipient of the bond. When the bonds arrive in the mail, they are printed with the parent or grandparent's name & social security as "owner" and our child's name as "co-owner."

So what happens if one of the owners has died in the meantime?

Bonds are intended to be held for a long time, usually maturing after 17-18 years. What these means for our grown children is that Grandma or Grandpa (who names may be on the bond as the "owner") have probably passed away by the time the bond is ready to be cashed.

This caused an interesting problem for my sons last week when they tried to cash in some savings bonds their Grandpa had purchased for them. According to the US Treasury web site (savingsbond.gov), if one of the two people listed on a savings bond is deceased, the survivor becomes the sole owner and can redeem the bond at any financial institution that processes bonds by showing picture identification.

At our local credit union, photo ID wasn't good enough. They also wanted a certified copy of Grandpa's death certificate before they would redeem our sons savings bonds. I thought this was a bit extreme, especially since my kids were listed as co-owners on the bonds and not beneficiaries. Beneficiaries do have to present a certified death certificate before redeeming a savings bond.

The bottom line is when it comes to helping your adult children cash their savings bonds for college, the best policy is to call your bank to find out what they require for identification. Many banks are fine with one form of picture ID while others may require that you be an established customer before redeeming the bonds. And some -- like our credit union, may require two forms of identification, a certified death certificate, and some verification from Mom that the transaction's OK.

resources:
US Treasury publication "Death of a Savings Bond Owner" found at savingsbond.gov.

More by this contributor:
How to open an IRA.
Interest earning savings options for teens.
How to cut college costs.