Dear Senior Living Adviser,
I have the power of attorney for my aunt who has dementia and lives in a memory care home. She has about $30,000 in Series EE savings bonds. She is rapidly going through her savings paying for care. Should I cash in the savings bonds now to provide a cushion in her bank account, or wait until the account balance is lower?
I also am an heir to her estate and was told that my power of attorney becomes void upon her death. I am not the executor of her will in another state and the attorney advised me to liquidate her assets to avoid probate.
I took the savings bonds to my bank to redeem them, but they told me to mail them to the U.S. Treasury. They gave me a website, which makes me nervous. Please advise what I should do with the savings bonds. She has $63,000 in the bank and $36,000 held in another account designated to her three nephews. Is it safe to mail the savings bonds to the U.S. Treasury?
— Lana Longview
Your bank spelled out the process. Savings bonds are registered bonds, so if the bonds were to get lost in the mail, that wouldn’t mean that someone else could redeem them. You can get them replaced. Still, it would be a good idea to send them either by registered mail or certified mail with return receipt.
The Treasury has a special form, PD F 1522 E, Special Form of Request for Payment of United States Savings and Retirement Securities Where Use of a Detached Request is Authorized, available online at the Treasury Direct website, that you’ll need to fill out to redeem the bonds. The key to this process is having the form signed by a certifying officer. An officer at your bank should be able to act in that capacity.
I’d argue that you shouldn’t wait to redeem the savings bonds. Keep in mind that your aunt will owe income tax on the interest earnings, so some of the proceeds will be needed to pay those taxes.
Because the possibility exists that your aunt may need to rely on Medicaid to pay for her care once her savings are exhausted, it’s important to remember that the federal government will review gifts and other transfers of holdings over a five-year “look-back” provision that kicks in at the time of a Medicaid application. Don’t give assets as gifts prior to her death without seeking the advice of an elder care or estate planning attorney.
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