Elderly relative has many U.S. EE bonds titled to her as trustee of
her revocable trust. No taxes have been paid on accumulated
earnings. My understanding is that the bonds will need to be cashed
in and the earnings reported and taxes paid by the estate after she
passes and that the tax rate paid by an estate is much higher than her
rate as an individual. (Her taxable income is quite low.) Have been
told (by treasurydirect.com telephone rep) that to retitle the bonds
to her as an individual with POD to heirs would be a taxable event.
Don't understand why it's NOT a taxable event to retitle bonds from an
individual into a trust but IS a taxable event to change them from the
trust back to just an individual with POD. Should we just leave the
bonds as-is, or start cashing them in each year in such a way as to
keep her in the lowest tax bracket possible?
- posted 8 years ago