There are only three ways you can title ownership of US savings bonds. Which of the three ways you choose can have big tax and inheritance implications for you and your family, whether you choose to own Series I savings bonds, Series EE savings bonds, or both. You should to go into your new investment with eyes wide open and that's what this is designed to help you accomplish.

Savings Bonds Title Option #1 - Single Ownership

The single ownership option is the easiest.

In essence, it means that your savings bonds have only one owner. This owner is the person who can cash the savings bonds, and when they die, the bonds will become part of his or her estate. That means that they will go through probate, along with other estate property.

Savings Bonds Title Option #2 - Co-Ownership

Co-ownership between spouses, family members, parents and children, or other parties, means that two people own the savings bonds together. Either person can cash the savings bonds without the permission or knowledge of the other party, triggering a taxable event for both. Just like a joint bank account, co-ownership of savings bonds means if one party dies, the other co-owner becomes the new, sole-owner. The savings bonds pass directly, avoiding probate because they are not part of the estate.

Savings Bonds Title Option #3 - Beneficiary

If you purchase savings bonds as a sole owner and choose to elect a beneficiary, the person you name will have no ownership or rights to the bonds unless you die.

Then, and only then, will they inherit your savings bonds. The savings bonds will skip probate entirely and pass directly to the person you've named.
Here is a big tax benefit for the beneficiary. You already learned from the Investing in Savings Bonds guide that you can either pay taxes on the interest that is added to your bonds each year, or wait until you cash the savings bonds, paying all of the taxes at once. Most people choose the latter. If the owners of the savings bonds dies and passes them to the beneficiary, then the beneficiary can elect to have all of the interest earned on the savings bonds included on the last Federal tax filing of the original, now deceased owner of the bond, making it a liability of his estate. In effect, the savings bonds are being passed tax-free with the estate itself picking up the tab. This is far preferable to receiving cash, where this is not an option.