| If you have a revocable living trust, funding of the | | | | notice that some bonds are missing, you can request |
| trust is an essential step to ensure that the trust | | | | a "trace" be placed on the bonds. |
| operates as intended. Funding your trust with the | | | | Additional Requirements for HH Bonds |
| bonds that you own is just one step in this funding | | | | If a grantor (creator) of the trust is subject to |
| process. In order to transfer your bonds to the | | | | backup withholding or if the IRS has notified |
| trustee of your trust, you will need to identify the | | | | appropriate persons that the trust estate is subject |
| type of bond, and select the proper method of | | | | to backup withholding, the applicable statements |
| transfer. You will also want to make sure that you | | | | immediately above the signature line of for PDF 1851 |
| have carefully considered whether there are tax | | | | to the effect that the owner, principal co-owner, or |
| implications in the transfer. | | | | trust is not subject to backup withholding should be |
| There are a number of different types of bonds. | | | | crossed out. If the trust was created by some |
| The U.S. Treasury Department issues government | | | | person other than the owner or co-owners, the |
| bonds such as Series E, EE, H, HH, & I bonds. | | | | trustee must complete an IRS Form W-9 and submit |
| Municipalities and school districts can also issue bonds. | | | | it with this request for reissue. Forms W-9 are |
| Funding your trust begins with identifying the type of | | | | available at financial institutions in the United States |
| bond you own. | | | | and Internal Revenue Offices. These forms can also |
| U.S. Savings Bonds | | | | be found on the IRS website. |
| Funding your savings bonds into your trust is simply | | | | The furnishing of Direct Deposit information is a |
| accomplished by completing the Federal Reserve | | | | condition of reissue of Series HH bonds bearing issue |
| Bank PDF 1851 form. Return the completed form, | | | | dates of October 1989 and thereafter. A Direct |
| together with an Abstract, Certificate, or | | | | Deposit form, PDF 5396 or SF 1199A which can be |
| Memorandum of Trust, and the original bond | | | | obtained here, must be completed for Series HH |
| certificates to the United States Department of the | | | | bonds dated October 1989 and thereafter. The |
| Treasury, Bureau of the Public Debt, PO Box 7012, | | | | Direct Deposit form must be completed by a trustee |
| Parkersburg, WV 26106-7012. But, before doing so, | | | | providing the appropriate information for direct |
| review the tax considerations discussed below. Retain | | | | deposit of the semiannual interest payments. Forms |
| a copy of everything you send, including a copy of | | | | SF 1199A are available at financial institutions in the |
| each bond certificate. | | | | United States. The financial institution designated to |
| PDF 1851 requires a Medallion Signature Guarantee in | | | | receive the payment can assist in the completion of |
| order to be accepted by the U.S. Treasury | | | | the Direct Deposit form. |
| Department. You can obtain a Medallion Guarantee | | | | Tax Considerations |
| from any bank or broker/dealer. If you have | | | | Funding U.S. Savings Bonds needs to be done with |
| difficulty, please see your estate planning or elderlaw | | | | some extra care to avoid acceleration of income tax. |
| attorney. | | | | The IRS has ruled that transferring a U.S. Savings |
| Preparing the PDF 1851. There are several important | | | | Bond into a revocable living trust is not an income |
| issues you should be aware of when preparing the | | | | taxable event so long as the bonds were transferred |
| PDF 1851. If the form is not completed correctly, it | | | | to the trust of the maker that provided the |
| will not be accepted by the Federal Reserve Bank | | | | proceeds to purchase the bonds. Treas. Reg. |
| and will be returned to the sender. When preparing a | | | | §1.454-1(a)(iii); Rev. Rul. 79-409, 1979-2 C.B.208; |
| PDF 1851 form, you must utilize a separate PDF 1851 | | | | Rev. Rul. 58-2, 1958-1 C.B. 236. In other words, the |
| form for both E series and H series bonds. You may | | | | grantor of the trust must also be the purchaser of |
| not put two different series of bonds on the same | | | | the bonds. If the bonds were not originally owned by |
| form. | | | | the grantor of the trust, an acceleration of the |
| If there are two or more owners on the face of the | | | | accrued income will occur and you will be obligated to |
| bond, the first name listed is considered the primary | | | | pay additional income tax. |
| owner and must sign the PDF 1851 on the first | | | | Because of the taxable concerns regarding U.S. |
| signature line. Additionally, if there are multiple owners | | | | Savings Bonds, exercise extreme caution when |
| on different bonds, you cannot list more than one | | | | attempting to fund savings bonds to a revocable |
| group of owners on any one PDF 1851. | | | | living trust. If you are not certain whether the |
| The type of co-ownership, however, does not | | | | funding of a particular U.S. Savings Bond will result in a |
| necessitate the need for an additional PDF 1851 if the | | | | taxable event, you should seek counsel from your |
| group of owners are the same. Thus, it does not | | | | estate planning attorney. |
| make any difference whether the co-owners own | | | | Municipal Bonds, School District Bonds, & Capital |
| the bonds as tenants in common or as joint tenants | | | | Improvement Bonds |
| with rights of survivorship; as long as the owners are | | | | Like stocks, ownership of this types of bonds may |
| the same, only one PDF 1851 is utilized. | | | | be on account with your broker/dealer, or by |
| Due to the complexities of ownership and funding | | | | possession of an actual bond certificate. If the bonds |
| government bonds, if you have numerous bonds with | | | | are held in an account, simply change the title on the |
| various types of ownership, with different persons as | | | | account. |
| owners, you should consult with your estate planning | | | | Ownership of bonds may be evidenced in the form |
| attorney before sending the completed form. As | | | | of a bond certificate that is similar in appearance to a |
| slow as an attorney might be in reviewing your form, | | | | stock certificate. Funding these types of bonds is |
| it is likely to be much quicker than the time | | | | accomplished through the use of a Bond Power. The |
| necessary for the Federal Reserve Bank to receive, | | | | Bond Power can be obtained from an financial |
| review, reject, and return your form. | | | | institution or broker/dealer. One such form can be |
| Let me reiterate: maintain a copy of everything! It is | | | | obtained here (Hint: it is found under stock/bond |
| not uncommon for the Federal Reserve Bank to | | | | power). The Bond Power will generally need to be |
| return the bonds to you in two or more shipments. | | | | Medallion Signature Guaranteed in order to be |
| Keep a copy of the PDF 1851 form. It may be | | | | re-titled. For assistance in preparing a Bond Power |
| prudent to carefully compare the funded bonds you | | | | and obtaining a Medallion Signature Guarantee, consult |
| receive from the Federal Reserve Bank against a | | | | with an elderlaw or estate planning attorney with |
| retained copy of the PDF 1851 form which will verify | | | | experience in trust funding. |
| what you should have received in return. If you | | | | |