Registering I-bond under living trust?

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Registering I-bond under living trust?

Post by overthought » Tue Nov 07, 2017 8:49 am

After some reading, I'd like to start an I-bond ladder for my emergency fund. Plan is to buy $10k before year end, and an additional $10k each succeeding year until I have $50k.

However, after reading some of the horror stories people have encountered trying to take control of a deceased I-bond holder's accounts, I'm trying to figure out the most "estate efficient" way to buy these.

We have a family trust in place, so I could do this one of two ways:
  • Buy as primary owner with Her as secondary owner, grant Her account transact rights, and name the trust as beneficiary. If I understand correctly, upon death or incapacity of either co-owner, the other is still able to transact. If both co-owners are deceased, the bond passes to the trust. It's not clear what would happen if both co-owners were incapacitated, however.
  • Buy as trustee of the trust. The trust instructs to use this language: "Him and Her, Trustees (and their successors in trust), His and Her Family Trust U/A/D MMM DD, YYYY". Under this mechanism, I cannot grant other accounts view or transact rights.
If I went with the trust-as-owner option, I would have to mail in a copy of the trust (see section 8 here) to prove that trustees are allowed to act alone, but otherwise it strikes me as a vastly less fiddly option.

Either way, it's quite clear I will need to store account and bond information in a secure place where a future trustee could find it. What's not clear is, how much interaction a future trustee would even need to have with TD? The instructions for death of a TD account holder say to email the Bureau of Fiscal Service so they can put a hold on the account and send further instructions... but if the trustee has account login info, is legally authorized to manage the bonds held in trust, and has already taken control of the linked bank account, why couldn't they just use the account directly to either redeem or reissue the bonds?

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