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Designating an I-Bond Beneficiary

Posted: Sat Oct 17, 2020 5:20 pm
by Kookaburra
Hi Bogleheads

DH and I are considering purchasing I-bonds this year for the first time. My understanding is that we each need to set up our own Treasury Direct account and contribute individually. Or is there a joint account option?

If we have to set up individual accounts, is there a way to designate the surviving spouse as the beneficiary of the other person’s account?

Thank you

Re: Designating an I-Bond Beneficiary

Posted: Sat Oct 17, 2020 5:54 pm
by wriley4409
My wife and I set up our ibond purchases as joint ownership. (you title the bond 'with' the spouse, in the naming convention used within Treasury Direct.)

Here is a Q&A on the Treasury Direct web site: https://www.treasurydirect.gov/indiv/he ... dsecondary

Re: Designating an I-Bond Beneficiary

Posted: Sat Oct 17, 2020 7:19 pm
by HueyLD
Kookaburra wrote: Sat Oct 17, 2020 5:20 pm DH and I are considering purchasing I-bonds this year for the first time. My understanding is that we each need to set up our own Treasury Direct account and contribute individually.
Yes.
Or is there a joint account option?
No.
If we have to set up individual accounts, is there a way to designate the surviving spouse as the beneficiary of the other person’s account?
You can designate any adult as the beneficiary.

Note that the good old days of co-ownership for paper bonds are gone. Instead, you can designate a secondary owner who is essentially a beneficiary except that you can grant view and transaction rights to the secondary owner. Otherwise, the secondary owner has no rights to the ownership.

Here is the relevant Treasury regulations https://www.govinfo.gov/content/pkg/CFR ... qnum363.11

“ 3) Primary owner with secondary owner.
(i) The purchaser must be named in the registration as the primary owner with another individual as secondary owner.

(ii) The primary owner holds the securities in his or her account and may view or conduct permitted online transactions in the securities.

(iii) The primary owner may remove the secondary owner without the consent of the secondary owner.

(iv) The secondary owner has no rights to view or conduct transactions in any security unless the primary owner gives the secondary owner these rights.

(v) The primary owner may give the secondary owner the right to view any security or rights to view and conduct transactions in any security online from the account of the secondary owner.

(vi) Once the right to conduct transactions in a security has been given to the secondary owner, the primary owner may view and conduct transactions in the security from the primary owner's account, and the secondary owner may view and conduct transactions in the security using the secondary owner's own account.

(vii) The primary owner may revoke any rights previously given to the secondary owner at any time.

(viii) Upon the death of either the primary or secondary owner, the security becomes the property of the survivor, despite any attempted testamentary disposition or any applicable local law to the contrary.

(ix) If both the primary and the secondary owner die under conditions where it cannot be established, either by presumption of law or otherwise, who died first, the security is the property of the estate of the primary owner.

(x) In order for the secondary owner to obtain the security or the security proceeds after the death of the primary owner, the secondary owner must provide proof of death of the primary owner. If the secondary owner has a TreasuryDirect account, the security will be transferred to that account. If the secondary owner does not have an account, he or she may establish an account. Alternatively, a secondary owner named on a savings bond may request redemption. If the secondary owner requests redemption, he or she must provide ACH instructions.”

Re: Designating an I-Bond Beneficiary

Posted: Sat Oct 17, 2020 9:57 pm
by Kookaburra
HueyLD wrote: Sat Oct 17, 2020 7:19 pm
Kookaburra wrote: Sat Oct 17, 2020 5:20 pm DH and I are considering purchasing I-bonds this year for the first time. My understanding is that we each need to set up our own Treasury Direct account and contribute individually.
Yes.
Or is there a joint account option?
No.
If we have to set up individual accounts, is there a way to designate the surviving spouse as the beneficiary of the other person’s account?
You can designate any adult as the beneficiary.

Note that the good old days of co-ownership for paper bonds are gone. Instead, you can designate a secondary owner who is essentially a beneficiary except that you can grant view and transaction rights to the secondary owner. Otherwise, the secondary owner has no rights to the ownership.

Here is the relevant Treasury regulations https://www.govinfo.gov/content/pkg/CFR ... qnum363.11

“ 3) Primary owner with secondary owner.
(i) The purchaser must be named in the registration as the primary owner with another individual as secondary owner.

(ii) The primary owner holds the securities in his or her account and may view or conduct permitted online transactions in the securities.

(iii) The primary owner may remove the secondary owner without the consent of the secondary owner.

(iv) The secondary owner has no rights to view or conduct transactions in any security unless the primary owner gives the secondary owner these rights.

(v) The primary owner may give the secondary owner the right to view any security or rights to view and conduct transactions in any security online from the account of the secondary owner.

(vi) Once the right to conduct transactions in a security has been given to the secondary owner, the primary owner may view and conduct transactions in the security from the primary owner's account, and the secondary owner may view and conduct transactions in the security using the secondary owner's own account.

(vii) The primary owner may revoke any rights previously given to the secondary owner at any time.

(viii) Upon the death of either the primary or secondary owner, the security becomes the property of the survivor, despite any attempted testamentary disposition or any applicable local law to the contrary.

(ix) If both the primary and the secondary owner die under conditions where it cannot be established, either by presumption of law or otherwise, who died first, the security is the property of the estate of the primary owner.

(x) In order for the secondary owner to obtain the security or the security proceeds after the death of the primary owner, the secondary owner must provide proof of death of the primary owner. If the secondary owner has a TreasuryDirect account, the security will be transferred to that account. If the secondary owner does not have an account, he or she may establish an account. Alternatively, a secondary owner named on a savings bond may request redemption. If the secondary owner requests redemption, he or she must provide ACH instructions.”
My intent is for any I-bond assets to immediately pass to my spouse upon my death. So should I make them the beneficiary or a secondary owner?

Re: Designating an I-Bond Beneficiary

Posted: Sun Oct 18, 2020 5:58 am
by dcabler
An old thread on this subject:
viewtopic.php?p=4757161#p4757161

Cheers.

Re: Designating an I-Bond Beneficiary

Posted: Sun Oct 18, 2020 6:02 am
by HueyLD
OP asked: “ My intent is for any I-bond assets to immediately pass to my spouse upon my death. So should I make them the beneficiary or a secondary owner?”

There is no way to “immediately” pass anything to another person without going thru a lot of paper work like sending death certificate with appropriate forms to the Treasury Retail Division. Since you may want to let your spouse have transaction authority over your lifetime, you want to make your spouse a secondary owner.