US Savings Bonds are a popular investment tool, offering a secure and low-risk investment option. However, you may not be aware that these bonds can be transferred into a trust, a legal entity that holds assets on behalf of certain beneficiaries. This blog post provides a comprehensive guide on transferring US Savings Bonds into a trust.
Understanding US Savings Bonds
US Savings Bonds are government-issued and guaranteed investment securities. They come in two types: Series EE and Series I bonds. Both are low-risk investments that earn interest over a period of time. They cannot be sold to a third party and can only be redeemed by the registered owner or a beneficiary in case of the owner's death.
Benefits of Transferring US Savings Bonds into a Trust
Transferring your US Savings Bonds into a trust can offer several benefits. It can provide legal protection, possible tax benefits, and ensure a smooth transition of ownership after the owner's demise, avoiding the lengthy and costly probate process. It also provides a controlled environment for asset management.
Setting Up a Trust for US Savings Bonds
- Choose the type of trust: Decide between a revocable (can be altered or canceled) and an irrevocable trust (cannot be changed without trustee's permission).
- Select a trustee: This is the person who will manage the assets in the trust.
- Create the trust document: This legal document contains the terms of the trust, including the details of beneficiaries and asset management.
- Fund the trust: This step involves moving your assets, i.e., the US Savings Bonds, into the trust.
Process of Transferring US Savings Bonds into a Trust
- Compile bond details: Gather all information about the bonds, including the serial numbers, issue dates, and denominations.
- Complete the required forms: Fill out the necessary Treasury forms such as FS Form 1851 for the reissue of bonds in the name of the trust.
- Notary seal: Your signature on the form needs to be certified by a notary public.
- Submit forms to the Treasury Department: Mail the completed forms along with the bonds to the Treasury Retail Securities Site.
Consulting with Professionals
Given the technicalities involved, it's advisable to consult with a financial advisor or lawyer. They can guide you through the process and help prevent potential legal or financial pitfalls. Always make sure to keep copies of all documents for your records and future reference.
Transferring US Savings Bonds into a trust may seem complicated, but with careful planning and professional guidance, it can be a relatively straightforward process. This strategic move can provide significant benefits, including legal protection, tax advantages, and a seamless transition of assets.