Updated August 3, 2026. Quick answer: two things decide everything. The registration on the bond decides whether it goes through the estate at all — and a will cannot change that. Then, separately, somebody has to choose where the accrued interest gets taxed, and that choice is made once, on the final return, and cannot be revisited.
What the registration does
| Registration | What happens at death |
|---|---|
| Sole owner, no beneficiary | “That person is the only one who gets the interest, may cash in the bond, may make other changes… If that person dies, the bond becomes part of their estate.” |
| Owner with POD beneficiary | “If the owner dies, instead of the bond going into the person’s estate, the beneficiary automatically becomes the single or sole owner.” |
| Co-owners | “Either owner may cash the bond without the knowledge or approval of the other. If one owner dies, the other becomes the single or sole owner.” |
| Everyone named has died | If both co-owners or registrants have died, the bond is part of the estate of the person who died last. |
Where somebody survives, Treasury treats them as though “the survivor becomes the owner as if the survivor had been the only owner from the date we issued the bond”. A will cannot override the registration. Where a co-owner or POD beneficiary survives, the bond never becomes estate property at all.
So the single most useful thing anyone holding savings bonds can do is look at how they are registered. That is where the answer already is.
If it does go through the estate: the $100,000 line
There is a threshold that decides whether a court has to be involved at all. From FS Form 5336, Disposition of Treasury Securities Belonging to a Decedent’s Estate Being Settled Without Administration:
If the decedent’s securities and/or related payments are worth over $100,000 redemption and/or par value as of the date of death, Treasury regulations require that the estate be administered through the court; in that event, this form may not be used.
Below that line a voluntary representative can act without a court — a voluntary representative in a strict order of precedence – surviving spouse, blood relative, legally adopted child, or next of kin as determined by law. Two conditions catch people: ALL securities belonging to the decedent’s estate must be included in this transaction. And it cannot be used to distribute bonds or make payment to a trust.
Where securities other than bonds are involved, the obstacle heirs hit is not the court but the counter: a transfer agent asks for a medallion signature guarantee and no bank will stamp for a non-customer. The SEC rule binds the transfer agent, not the guarantor — which is why the practical route is an institution that already holds the assets or the relationship.
The court-administered paths
| Situation | Form |
|---|---|
| Court-appointed representative redeeming to the estate | FS Form 1522, with certified signature and title |
| Representative distributing to heirs instead | FS Form 1455, then FS Form 1522 to redeem or FS Form 4000 to reissue |
| Closed-administered or small-estate proceeding | FS Form 5394, certified signature for each person |
Certified copy of the death certificate for everyone who has died who is named on any of the bonds; for court paths, legible copies of Letters of Appointment with visible stamps or seals. Treasury cannot return legal evidence.
And if there is an online account: “If the person who died has an online TreasuryDirect account, contact us. We will put a hold on the account and tell you what to do.” There is no self-service route for a death. What the account registration does.
More on savings bonds
- The EE bond doubling guarantee — a one-time adjustment at year 20
- I bond limits and the gift box — delivery year is what counts
- When TreasuryDirect asks for a signature — certify, do not guarantee
The tax election, which is the part with money in it
The IRS rule: “Decedents. The manner of reporting interest income on Series E, Series EE, or Series I bonds, after the death of the owner (decedent), depends on the accounting and income-reporting methods previously used by the decedent.”
Where there is a choice: “The person (executor, administrator, etc.) who is required to file the decedent’s final income tax return can elect to include all of the interest earned on the bonds before the decedent’s death on the return. The transferee (estate or beneficiary) then includes only the interest earned after the date of death on its return.”
And if that election is not made: “If the election … wasn’t made, the interest earned to the date of death is income in respect of the decedent and isn’t included on the decedent’s final return.”
Where there is no choice at all: If the decedent HAD been reporting interest annually, or used the accrual method, there is no election at all – the interest earned in the year of death up to the date of death MUST be reported on the final return.
What the choice actually trades
Reporting it on the final return taxes it at the decedent’s marginal rate for that final, often short and low-income, year, and takes it out of the beneficiary’s picture entirely. Deferring taxes the whole amount – before and after death – to whoever eventually cashes the bond, at their rate, in the year they redeem or at final maturity, whichever comes first.
Stated as mechanics rather than advice, because the answer depends entirely on two marginal rates: the decedent’s in a final year that is often short and low-income, and the beneficiary’s in whatever year they eventually redeem. The one thing that is not neutral is failing to notice the choice exists — because doing nothing silently selects the second option.
IRC 691(c) allows a deduction for federal estate tax paid attributable to the income in respect of a decedent. It only matters if the estate actually paid federal estate tax, which the large majority of estates do not.
This belongs in front of whoever prepares the final return, and it belongs there before the return is filed. The equivalent problem on retirement distributions.
General information drawn from IRS, Medicare, HUD and state statute and regulation, not legal, tax or financial advice. Continuing-care law is state law and differs materially between states; every figure here is year-labelled and every source named. Fiduciary licensing, executor compensation and intestacy are STATE law and differ change. Rates and limits are year-labelled and move; verify current terms at treasurydirect.gov before acting. Nothing here is a prediction or a recommendation about any investment – it describes how these instruments work.