Savings Bond Title Options

A savings bond is a security instrument issued by the government of the United States. The bond can have a face value of anywhere from $50 to $10,000, is considered a low risk security because it is backed by the government. One reason why this debt instrument is popular is due to the tax benefits that it carries. Typically, this bond is exempt from local taxes and it can be deferred from federal taxes once it is redeemed. Before you put money in this bond, you should know that there are three ways in which you can list your investment ownership.

1. Single Ownership


Single ownership is the simplest ownership because only one person has ownership rights to the bond. As the titleholder, you are the only one who can cash the bond. Although one disadvantage of single ownership is that the bond will become part of the titleholder’s estate if should die before the bond redemption. This means that the bond, together with other estate properties of the owner, will have to go through complex probate process.

2. Joint Ownership

A joint ownership savings bond title option, popularly known as co-ownership, has two registered bond owners. You can name your spouse, parent, child, or any family member as the co-owner of the bond security. This option is ideal for those who do not want their properties and investments to be part of the estate and to undergo probate procedures. However, it is important to note that either of the owners of the bond can redeem it, without the knowledge or consent of the other. If one of the titleholders dies, the surviving owner will become the sole owner of the investment instrument. Before you decide to name an individual as your co-owner, you need to know that both your signatures and joint approval are needed to remove or change the co-ownership structure.

In this type of ownership arrangement, the first name that appears on the bond is considered as the principal owner under the rules of the Internal Revenue Service (IRS). Accordingly, the primary owner will be responsible for paying the taxes on the interest income earned from the bond. However, if there are special arrangements between the two parties, a contract will have to be shown to the IRS.

3. Beneficiary Savings Bond

In this type of savings bond title option, the investor is the sole owner of the bond and they can elect a beneficiary who will inherit the ownership of the security at the time of the primary owner’s death. Unlike joint ownership, the beneficiary cannot redeem or cash the bonds while the owner is still alive. This type of ownership is also ideal for investors who do not have an estate plan or those who do not want their heirs to undergo probate procedures.

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