One limitation of buying I Bonds is the annual purchase limit. Each person can buy a maximum of $10,000 per calendar year as the primary owner. See How to Buy I Bonds.
If you see I Bonds as an investment, it’s true you can’t dump $500,000 into I Bonds in one shot. However, if you see I Bonds as another account, the $10,000/person limit is higher than the annual contribution limit for an IRA. You never hear people say you shouldn’t bother contributing to an IRA because the limit is only $6,000 or $7,000 per year. People go to great lengths to contribute to their IRA with a backdoor Roth.
In addition, if you have a trust, you can buy another $10,000 per year under the name of the trust. A lawyer created a revocable living trust for us back in 2018. It was surprisingly easy when I opened an account for the trust at TreasuryDirect last month. It took only 15 minutes to open a new trust account and buy another $10,000 of I Bonds.
Entity Account
When you open a new account for the trust, you open an Entity Account with the type Trust. A trust account is one type of entity account. The other types include corporation, partnership, LLC, PLLC, and sole proprietorship. Please read Buy I Bonds for Your Business if you have a business.
Registration Name
TreasuryDirect has instructions for opening an entity account. The instructions look complicated but it’s not that bad if you read closely. The most tricky part is the name of the trust account. If your revocable living trust is created by a trust agreement, they want the registration to include both the trustee(s) and the grantor(s). If it’s created by a declaration of trust, they want only the trustees.
My wife and I have a joint trust. We are both trustees and grantors. The trust document says “Trust Agreement” at the top. So the name of our registration becomes:
Person A or Person B, Trustees, [Name of the Trust] U/A with Person A and Person B dated [Month Date, Year]
The second trust we created using software says “Declaration of Trust” at the top. So the registration of this second trust is:
Person A or Person B, Trustees, [Name of the Trust] U/D/T dated [Month Date, Year]
The instructions include a list of approved abbreviations. “U/A” stands for Under Agreement. “U/D/T” stands for Under Declaration of Trust. They allow 150 characters in the registration. Although the registration looks long, it fits within 150 characters. TD FS Publication 0049 also has more examples for trust registrations.
Tax ID
A revocable living trust typically uses the grantor’s Social Security Number as its Tax ID. The trust account at TreasuryDirect can still use the grantor’s Social Security Number even though the grantor also has a personal account with TreasuryDirect under the same Social Security Number.
Email Address
The trustee acts as the manager of the trust account. TreasuryDirect wants an email address for sending one-time passwords and notifications. You can use the same email address if you’d like when you also have a personal account at TreasuryDirect.
Bank Account
The new trust account needs a linked bank account. The bank account doesn’t have to be under the name of the trust. It can be the same personal bank account linked to the grantor’s personal account at TreasuryDirect.
Between the personal account and the trust account, the Tax ID, the email address, and the linked bank account can all be the same if you’d like. The account number and the account type are different.
As in personal accounts, it’s easy to link a bank account when you first open the account but it’ll require paperwork and a long wait if you need to change the linked bank account. Be sure to link a bank account that you’ll keep using forever. TreasuryDirect doesn’t do any random deposits to verify the bank account. You can enter an order to buy as soon as you create the trust account. Make sure you give the correct bank account. If the debit bounces, your account will be locked and it’ll take effort to unlock it.
Joint Trust or Separate Trusts
Some married couples have separate trusts for each spouse. If you have two trusts, you can open a separate account for each trust and buy another $10,000 of I Bonds every year in each account.
It’s also not uncommon for a married couple to have a joint trust, in which they are both the trustees and the grantors. Although the trust can use either grantor’s Social Security Number as its Tax ID, I don’t think it can use two different Tax IDs simultaneously. If you have one joint trust, the trust can open only one account under one Tax ID and buy $10,000 per year in that one account. If you’d like to buy another $10,000 per year, you need a second trust. We used to have only one joint trust. We created a second trust with software (see below).
In addition, if the joint trust has two trustees and the trust has the word “AND” between the trustees, TreasuryDirect wants to be sure that the trust allows either trustee to act alone on behalf of the trust (versus requiring the consent of both trustees). They want documentation to demonstrate that’s the case. Please read the official instructions for what they need and where to send them.
Multiple Trusts
Some people have multiple trusts, with different beneficiaries, funded with different assets, etc. As long as each trust has its own signed and notarized formal trust document, it’s a separate trust from the other trusts even if all the trusts use the same tax ID for tax purposes. Each trust can open a TreasuryDirect account and buy up to $10,000 in I Bonds each calendar year (see comment #36 for a confirmation from TreasuryDirect customer service).
Create Trust by Software
If you don’t have a trust and you don’t otherwise need one, you can still create a trust just to buy more I Bonds. It may not be worth it if you have to go to a lawyer but if you make it really simple, you can do it with software. See Create a Simple Revocable Living Trust with Software for I Bonds.
Keep Them Separate
A trust can’t be the beneficiary or the second owner on I Bonds. The beneficiary or the second owner has to be a person (see the previous post I Bonds Beneficiary vs Second Owner in TreasuryDirect).
Although there’s a way to transfer existing bonds held in a personal account to a trust account, TreasuryDirect doesn’t like it. They allow you to do either one of the following but not both:
- Buy $10,000 per calendar year in a personal account and another $10,000 per calendar year in a trust account; OR
- Transfer existing bonds from a personal account to a trust account (for example after you set up a trust) or transfer existing bonds from a trust account to a personal account (for example right before you revoke a trust).
You’ll get a stern warning if you buy the maximum in both accounts and transfer from one account to the other in the same year because a transfer counts against the annual purchase limit of the destination account. So if you’re buying the maximum in both a personal account and a trust account, you should just keep your personal account and your trust account separate. Designate a second owner or a beneficiary on the bonds in your personal account and grant the necessary rights. See the previous post How To Grant Rights on I Bonds to the Second Owner or Beneficiary.
When you’re done with buying the maximum in both accounts and you wish to only use one account going forward, you can consolidate your holdings into one account in a year when you’re not buying I Bonds in the destination account. Go to ManageDirect and then “Transfer securities.” It may ask you to use FS Form 5511 and get a signature guarantee.
After You Die
The trust account has only one Account Manager. After the designated Account Manager dies, a co-trustee or a successor trustee must take over as the new Account Manager. The co-trustee or successor trustee needs to fill out FS Form 5446 to make the change and attach the required documentation.
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Steve Johnson says
As always, I enjoyed reading your article. My understanding is that you and your wife are the grantors of your revocable living trust. To purchase more than the $10,000 annual limit, you have established at least two Treasury Direct accounts; one in the name of the trust, and a personal accounts in your name. Can the trust be designated as the beneficiary of the personal account? If so, wouldn’t that be the best way to ensure that the proceeds are distributed to your heirs without the potential bother of probate?
Harry Sit says
The trust can’t be designated as the beneficiary. The beneficiary has to be a person.
PDB says
I’m not sure if this has been covered or would be obviated by the $10k per account type ss#:
Similar to establishing multiple bank accounts and gaining excess FDIC coverage , could I establish multiple “payable on death” totten trusts (an informal revocable trust) with a different beneficiary for each, fund each with $10k, but use my ss# as I would for such an account at a bank?
Harry Sit says
“Payable on death” in TreasuryDirect isn’t treated as a trust. It’s only a “registration” within your personal account. It doesn’t increase your purchase limit. You need a formal trust document to open a trust account at TreasuryDirect.
John Letzkus says
can a trust holding an ibond gift another trust?
Harry Sit says
A trust can neither give nor receive a gift bond.
Mary F says
I read this as saying you couldn’t do this since my trust has the same SSN as I do. You have actually done this and it works?
https://www.treasurydirect.gov/indiv/research/faq/annualpurchaselimitchangeqa.htm
What is the annual purchase limit for U.S. Savings Bonds?
Effective January 4, 2012, the annual (calendar year) purchase limit applying to electronic Series EE and Series I savings bonds is $10,000 for each series. The limit is applied per Social Security Number (SSN) or Taxpayer Identification Number (TIN). For paper Series I Savings Bonds purchased through IRS tax refunds, the purchase limit is $5,000 per SSN.
Harry Sit says
Yes it works because the personal account and the trust account are of different account types. That Q&A must be talking about personal accounts only or accounts of the same type.
Jonathan says
I think it is tracked per SSN … so unless the revocable living trust has a distinct TIN, then it won’t work.
Tom E. says
I read the restriction the same way you do. The Treasury Direct website states “The limits are applied per Social Security Number of the first person named as owner of a bond or, for an entity, per Employer Identification Number”. So, it seems clear that, if your Living Trust does not have a unique EIN (and uses your SSN), the $10,000 limit would apply to both. But it does that their website might let you place orders in both account that exceed this overall annual limit. Regarding this, their website also states that “Any purchase in excess of $10,000 is in violation of the regulation and will be refunded; refunds may take up to 16 weeks. Continued violation may cause your account to be closed/suspended.” I emailed Treasury Direct to make sure I was reading this correctly. Unfortunately, their automated reply stated that “Due to heavy volume, we are temporarily limiting our communication by email” (and will not respond). But, from the language on their website, it appears that: (1) it’s possible to purchase $10,000 in both your personal and living trust accounts, even if they use the same number; however (2) at some point, the IRS will or may recognize that you’ve exceeded the limit and will refund the excess amount (whether or not you would be entitled to any interest is unclear); and (3) they might also suspend your account if you continue. Good luck. I would be interested in knowing if anyone that’s been doing this (putting the max into both a personal and trust account that use the same SSN) has ever had the IRS take the actions their website says they may.
Dunmovin says
Tom, I’ve had/have several accounts over the years at TD and some were a little more difficult than some to get off the ground but the most recent was over a year ago. It’s my understanding that an individual account and a trust account can have the same SS number with $10k for each for each year…that is the way mine works. Interest is currently posted for each and I continue to make purchases in separate years. I believe I’ve read where some have set up multiple (bona fide) TD trust accounts and of course they could have same SS numbers. I don’t have the time/inclination to do that. I also have business account with unique tax Id number (a pain to set up at TD but working fine for last year plus). Hopefully this helps
Philip Zion says
I asked this direct question to Treasury Direct customer service this morning and received an immediate “Yes.”
“Good morning
“I have a question about annual purchase limits for Series I.
“I am the trustee on a family living trust.
“Can I have an individual TD account and an entity TD account under the same SSN, to purchase $10,000 in each.”
Treasury Direct says “yes” 10/17/22 @ 8:31 AM.
Kevin says
I had wondered if I could have 2 accounts using my trust and actually wrote Treasury Direct last week. Their reply was a bit legalese but matched this blog post. So my wife and I could have 4 accounts beteen us. 2 trust accounts (with each of us as a lead) and 2 individual accounts. I just need the $40k to max them out!
Burt Peterson says
Kevin, is your Trust a single Joint Living Trust with you and spouse as Trustees or do you have two separate trusts? Thanks.
Kevin says
It is a single trust. But both of us have full authority to buy, sell, etc. So my understanding is that I could be lead on one account and she could be lead on other. Each would have separate lead and SSN. Is this incorrect? It doesn’t matter much to us (we are not positioned to add $40k per year) but could matter to others.
Harry Sit says
Our joint trust has two trustees but only one Tax ID. The Tax ID is designated in the trust document. It doesn’t matter which trustee acts on behalf of the trust. The trust’s Tax ID is still the same.
Burt Peterson says
Our Trust is a Joint Living Trust and is revocable, hence is considered a Grantor trust; as such, it does not have its own TIN but using the SSN of a Grantor. I’m wondering whether we can establish two separate Trust-type accounts at TD by each of us creating one using our individual SSNs. That is, it seems, what Kevin was initially referring to here. I have not tried this at TD, but it seems it should work since each Trust-type of account would have a different TIN (SSN).
Steve says
Burt, In your recent post you said that your revocable living trust does not have its own TIN but uses the SSN of a grantor of the trust. Like most revocable living trusts, my trust is similar to yours. My wife and I are grantors, but my trust documents specify that my SSN is to be used as its tax ID number. There is no allowance for the use of my wife’s SSN when transacting trust business. Since our trust uses my SSN, all taxable income that flows through the trust to me and my wife must be reported each year on Form 1040 under my SSN. All entities with federal tax filing requirements use just one TIN. Trusts are no different, and only the identification number specified in the trust documents can be used for trust business. Using someone else’s TIN for the trust violates the terms of the trust. Depending on the circumstances, such an act could be seen as fraudulent.
Kevin says
I think Burt’s reply is better than mine – I think we’d be limited to 3 accounts (2 individual and 1 trust). Now I just need $30k to fund them each year.
Burt says
I have reviewed my Trust document and it does not specify an SSN to be used as the trust’s TIN. Our attorney’s instructions state “You should give your own social security numbers when opening accounts in the name of the trust.” I am inquiring of him as to what that means for the TD registration and the proper use of our SSNs in this regard. Our trust documents expressly permit both community and separate property to be transferred “to the Trustee” and that such property is to be segregated and not commingled. Also that the Trustee may establish separate trusts ‘hereunder’ for each type of property. So, one trust document, but three revocable trusts – 1) Community property, 2) my separate property and 3) my wife’s separate property, each with distinct names. Perhaps that makes a difference.
Harry Sit says
I agree with Steve, although I’m not a lawyer. Each entity has only one tax ID. You can choose to use which grantor’s SSN as the trust’s tax ID, but the same entity doesn’t get two tax IDs simultaneously. The trustees may establish separate trusts “hereunder” for different types of properties but when did they actually do that? Where is the document that established the separate trust? You can’t create a separate entity only in your head. It’s OK to have another trust using a different grantor’s SSN as its tax ID but it should be documented. Either exercise the power in the existing joint trust to create another trust under it or create a whole separate trust using software. Give it a different name and have proper notarized signatures and all that.
Gerry Cruth says
Kevin,
Could you quote the TD response to your question please. It wopuld really be useful to have that reference.
Thanks
Gerry
erik says
this is interesting. I am just wondering if I have 10x$10K series EE bonds in my personal account with treasurydirect, can move them to a newly created account at treasurydirect that pertains to my revocable trust?
Harry Sit says
See the new paragraph at the end. It applies to EE bonds as well. You should keep them separate if you’re buying in both accounts.
Steve says
Since the revocable living trust can’t be designated as the beneficiary of an individually owned Treasury Direct account, what is the easiest way to ensure that the I Bond proceeds go to the owner’s heirs as specified in the revocable living trust when the individual I Bond owner dies? Shouldn’t the linked bank account be one that is in the name of the trust? Wouldn’t that ensure that the trust would be the recipient of the bond proceeds thereby eliminating the risk of probate?
Jacquie Traub says
That would not eliminate the risk of probate. Without a POD (or a co-owner) the bond would go through probate before the proceeds were released, regardless of their final destination, (ie, your bank account that is in the name of your trust.) To avoid probate and get the I-Bond (or the redeemed proceeds) to your “heirs as specified in the revocable living trust when the individual I Bond owner dies,” the Treasury Direct account could be opened in the name of your trust, (just like your bank account was,) rather than as an individual account.
Erik says
My question is related to Steve. I want my trust to be the beneficiary of my personal Treasury direct account (but I can’t your comment harry). Is there a work around to this problem? Can you sweep /redesignante to the newly established account pertaining to my trust that has no seed money yet ( I bond or ee bond)?
Harry Sit says
If you’re going to abandon the personal account and only use the trust account in the future, you can transfer the existing bonds from the personal account to the empty trust account. Fill out FS Form 5511 and sign in front of a certifying officer at a financial institution. Read the form instructions on taxes. When you’re considered as in control of the trust, the transfer is not taxable. They just don’t like it when you buy in both accounts and still transfer from your personal account to the trust. Either keep two accounts separate and buy in both or transfer and only use the trust account afterward.
Erik says
Meaning no taxable event.
Steve says
Harry, could you reply to my comment (#5) concerning the probate protection of linking a trust bank account to the personal Treasury Direct account rather than linking a personal bank account to it? This would keep the eventual cash payout of the I Bond under the umbrella of the trust. Do you agree?
Harry Sit says
During your lifetime, while you’re still mentally compentent, you can certainly redeem the bonds and send the proceeds to a bank account under the name of a trust. That’s just funding the trust with personal assets, as you’re allowed to do with any other assets. If you granted transact rights to a second owner, the second owner can do the same on your behalf.
After your death though, I’m not sure anyone can legally use your password to redeem your bonds. Any power of attorney ends with your death. If you don’t have a second owner or beneficiary on the bonds in your personal account, the bonds belong to your estate and your executor has to establish him- or herself through probate. If you do have a second owner or beneficiary on the bonds, those assets belong to them now and they can’t fund your trust when they’re not a grantor.
So to me, it still comes down to the same two choices:
A) Keep the personal account and add a second owner or beneficiary on the bonds. Grant the necessary rights. Take this distribution outside the trust into consideration in how you allocate the trust assets.
Or
B) Transfer everything into the trust account and abandon the personal account.
Eric L. says
Harry, enjoyed your article very much. I am a sole proprietor and I learned, after reading your article and following the links, TD allows an entity account for a sole proprietorship. It appears that I could open another account for the business and potentially purchase another $10k per year. Does that sound correct to you, and if the business is dissolved, I assume there would be some kind of form to transfer them or redeem them? Do you have any tips for this situation?
Harry Sit says
Yes, a sole proprietor account is another type of entity account. As the business owner, you should dispose of the business’s assets before dissolving the business. You can either sell the assets for cash and distribute the cash or distribute the assets in-kind. If you don’t want to sell the bonds in the sole proprietor account, use FS Form 5511 to transfer them to your personal account.
Eric L. says
Thank you Harry! Sounds like if the entity was dissolved or the bonds were transferred, it would be a taxable event. Good to know — I appreciate your answer! I will definitely be putting some of the things I’ve learned in this article into practice.
Burt says
I’m not clear that dissolution of a sole proprietorship or other reason for a transfer of I Bonds to the personal account of the sole proprietor would be a taxable event. The activities of a sole proprietorship are reported on the proprietor’s personal tax return (form 1040, Schedule C). The proprietorship is not considered a separate legal entity – it is the individual. Therefore the transfer seems that it would be, like a transfer from a grantor-type trust, considered to be from one account of an individual to another account of that same individual. I don’t see anything on the transfer document (FS Form 5511) which directly addresses the question. Does anyone have any insight into this?
Eric L. says
Burt, my best guess is that if the SP were to incorporate or be sold, that would be a taxable event if the assets are transferred from the SP to the new entity. If the SP is dissolved, those assets can be retained by the individual without tax implications, since the individual owns the assets in the SP, as you said. I can’t find anything conclusive either (if you have, please share!), but the above is what I’m going with for now.
Mark Heyerdahl says
I want to add a beneficiary to my bonds. The ManageDirect >> Registration List >> Add page shows inputs for both a “First-Named Registrant” and “Second-Named Registrant (Required for Primary Owner and Beneficiary registrations only.)”. Selecting the Beneficiary radio button requires filling out both Registrant inputs. I just want to register one beneficiary, not two…?
Harry Sit says
When you add a beneficiary, you will be the first registrant and the beneficiary will be the second registrant. So just put your information in the first registrant inputs and your beneficiary’s information in the second registrant inputs.
Bryce says
Since you’re referring to a revocable trust, what happens if the trust is dissolved, that is, revoked? Are they reissued with new ownership?
Harry Sit says
Similar to having a sole proprietor account in comment #9, as the trustee you should dispose of the trust’s assets before revoking the trust. You can either sell the assets for cash and distribute the cash or distribute the assets in-kind. If you don’t want to sell the bonds in the trust account, use FS Form 5511 to transfer them to a personal account.
Burt says
This looks like It’s very helpful. It seems that for a transfer between spouses and a grantor trust to grantor, there is no taxable impact of the transfer.
Is it true that one may combine I Bonds into a single account at any desired time? Are there limits to doing so?
Donald Geo says
Seems like the registration of a living trust has to have some real names and not just family trust? Any comments?
Harry Sit says
From the instructions:
“The wording in the registration must specifically identify the trust. The registration must state:
1. The authority or document creating the trust.
2. The date the document was executed. (Not necessary in the case of a probated will.)
3. The name of a trustee who is authorized to act alone on behalf of the trust.
4. Any information that is necessary to distinguish the trust from any other trust.
5. Name of the Grantor”
You have to include at least one trustee and all the grantors. See the example in the post.
Lil says
Hey Harry,
Did you have to mail in your trust documents? Is the registration name the actual name of your trust or something just for the treasury registration?
Thanks
Harry Sit says
I didn’t have to mail in or submit trust documents. They have special requirements on the registration name. The actual name of our trust is the “[Name of the Trust]” part in the registration name.
Harry Sit says
Sorry, I misunderstood your question. The registration name is only for TreasuryDirect to meet their special requirement. The actual name of our trust is specified in the trust document. The registration name includes the actual name of the trust plus the extra information.
Donald George says
Any insight as to why TD is so picky on the registration name? Of course not really allowing more then two people on the account causes estate issues if both people die. There must be a legal something that the registration name means something?
Those quicky cheap trusts online do not let you change the registration name and have only some generic Family Trust!
Harry Sit says
Donald – Please see replies to comment #14 above. The registration name is only for TreasuryDirect. You can still have a generic Family Trust as the name of the trust.
Eric L. says
Harry is right, you don’t need to change the name of the trust.
I just got my paperwork back to open the account (they wanted a signature guarantee that I had to mail in) and despite combing the TD site and submitting what I thought was correct, they updated the registration on the account to:
Eric Y. Lxxxx, Trustee U/D/T dated [Month] [day], [year] (The Eric Y. Lxxxx Revocable Trust).
Pretty sure this is what I submitted up front, but there must be some subtle difference and I no longer have the application form to check. This isn’t a family trust like your situation, but maybe it will help.
Side note, be patient. It took over 2 months from when I mailed in the signature guarantee forms to when the account was updated and accessible.
Harry Sit says
Eric – Thank you for sharing your experience. The signature guarantee requirement seems unpredictable. I wasn’t asked to go through a signature guarantee when I opened the trust account. I’m not sure how they decide who needs a signature guarantee and who doesn’t.
Chris says
The title and all commentary mentions revocable trusts. For the experienced I-bond people, do you know if irrevocable trusts are any different?
Harry Sit says
No difference. A revocable trust typically uses the grantor’s Social Security Number as the tax ID. An irrevocable trust typically has a separate tax ID.
John says
2 questions: 1) Do you have to have a revocable trust to open a Treasury Direct Trust Entity account or can you just apply for the entity account and start buying an extra $10k of I-bonds per year registered to said account ? 2) After a parent’s revocable trust becomes irrevocable upon death can new I-Bonds continue to be purchased for a TreasuryDirect entity account created with the EIN of the now irrevocable trust using irrevocable trust cash?
ANON says
I would have to assume buying i-bonds in the name of an entity that doesn’t exist would be fraud.
Josh says
Is there a particular reason why we would want to avoid reissuing i-bonds from a personal account to a trust account, for estate planning purposes? It seems like this would be the best way to avoid probate…although, given the paper forms required, I understand that there is some extra hoops to jump through for this protection.
Harry Sit says
I added some explanation in the “Keep Them Separate” section. If you’re buying the maximum in both a personal account and a trust account, you’ll get a stern warning if you also transfer from one account to the other in the same year. You can consolidate when you’re done buying the maximum in both accounts and only use one account going forward.
Jacquie Traub says
Harry, you said TD gives a stern warning if we reissue a bond from the individual account, to the trust account in the same year. But they don’t take any other action? And what if you do that reissue the following year. Are they okay with that?
Harry Sit says
Jacquie – Here’s the text of the warning email after they do the transfer:
“Your purchase exceeds the annual savings bond purchase limitation. Please be
advised the limit is $10,000 per series and TIN per calendar year. Repeated
violations may result in an action by this office; for example, a refund of
account holdings and/or account closure may occur.”
I haven’t heard of anyone who dared to do it again after receiving this warning. You can always test it to see whether they really mean it or they’re only issuing an empty threat.
However, because they have a monopoly in selling I Bonds, if you’re buying I Bonds year after year for the long-term, I would think you want to be on good terms with them and avoid getting this warning even for the first time. If you’re only buying I Bonds for the short-term, there will be a year when you won’t be buying the maximum in both the personal account and the trust account. That’ll be the time to do the transfer. Either way, I don’t see a good reason to test their boundaries.
Aileen says
Can you comment on the difference between “transfer” and “reissuance” of i-bonds to a trust account? The above-mentioned “stern warning” seems to apply to transfers, but I remain curious if reissuance is the better path to avoiding probate. Note there is also a different form to request a reissuance (Form 1851).
Harry Sit says
Transfer applies to bonds in an online TreasuryDirect account. Reissuance with FS Form 1851 applies to paper bonds.
Anon says
Hey Harry,
Thanks for the insightful blog post.
My spouse and I both buy I-bonds under our SSN. We also have an LLC (One rental property) with its own EIN number. Can we buy an additional $10k of I-bond under the LLC name?
Thanks!
Don says
Seems like the TIN number is the key. An easy match!
linda chen says
Do personal account and trust account need separate log in ID and password?
Harry Sit says
The account numbers are different. You use your account number to log in. You can set the password to the same if you’d like.
Bob J says
The treasury direct help page says “If the legal name of your trust, as shown in your trust document, shows more than one trustee and the names are joined by the connector “AND” … you will be required to provide a Summary of Trust … or the appropriate pages of the trust showing that either named co-trustee may act independently.
The living trust for my wife and me does use the connector “AND” to join our names and my trust document says “Whenever the CREATORS conduct business on behalf of the TRUST for jointly owned property, both signatures will be required. Whenever either of the CREATORS conduct business on behalf of the TRUST for their separate property, only the signature of the property’s respective owner is required.”
So, is it possible for us to buy I Bonds under the name of the Trust somehow? If so, how do we comply with the requirements above?
Harry Sit says
The part you quoted gives the requirement for the CREATORS. Is there a separate section for the Trustees? Do you have one trustee or two trustees? If the trust has two trustees, how are they conducting business in a brokerage account? Does placing trades require two signatures?
Don says
You have to create a TD trust account. Give that registration a try! Keep us informed if you had to send them papers! Txs
Don says
What is curious about TD is that trusts are set up to have an ” easy” continuance managment of the assets. TD requiring a name seems to want to defeat this. But in the age of electronic transactions those with the logon password can make everything come out right!
DaveG says
I read a comment on another site that you could actually get $65k by adding two business accounts, also in the spouses’ name. Has anyone heard of this?
Harry Sit says
If they have two separate businesses, each business can open a separate account.
Bob says
Hi Harry,
really enjoyed all your I-bonds posts! I wanted to ask about tax rates and purchasing I-bonds in a trust.
Since the income tax brackets for a trust are quite low ($13,050 puts you in the 37% bracket), is it worthwhile to purchase I-bonds in them vs investing that money elsewhere? It seems at first glance you’d be taxed aggressively on any returns you might have.
Harry Sit says
A revocable trust doesn’t pay tax separately. It passes the income to the grantor. An irrevocable trust pays tax at the trust’s brackets only when it retains the income in the trust. If it distrbutes the income to the beneficiaries, the beneficiaries pay tax by their personal brackets.
Martin says
Harry,
Over at Treasury Direct I have an individual account limited to purchase 10K per year. I can set up an account for my business (a sole proprietorship) under a EIN or SS. If I set up with a EIN I am pretty sure I cay buy another 10K per year. If I set up the biz entity account with my SS will I be limited to 10K between both accounts (individual and business)?
Harry Sit says
A business is a separate entity from a person. That’s still the case even when the business happens to use the same tax ID as a person. Use whatever tax ID your business currently uses.
Ad says
Can i gift myself $10k series ibond through my revocable trust and then at same time purchase another $10k in my revocable trust, then purchase another$10k as an individual through my bank, and lastly purchase another $10k through my DBA? So all in all purchase $40k in series ibonds at same time?
Harry Sit says
A trust account can’t give or receive gifts.
Jacquie Traub says
Harry, Thank you for the great articles and for replying to all of our questions! I have another!! 😮
I’m trying to figure out how to register an account for my joint trust where my husband and I are both the trustees and the grantors, like you and your wife.
The TD FS Publication 0049 (https://treasurydirect.gov/forms/savpdp0049.pdf) states:
“When the trustee and the grantor are the same person, bonds are registered, “Trustee’s name” trustee under declaration of trust dated “date of trust instrument.”
When the trustee and the grantor are not the same person, bonds are registered, “Trustee’s name” under agreement with “Grantor’s name” dated “date of trust instrument.” ”
In your article, though you and your wife are both the trustees and the grantors, you chose the “Under Agreement” (U/A) clause rather than the “Under Declaration of Trust” (U/D/T). From the statement in the TD publication, I would think it would be the other way around. Am I missing something? Thanks for your input.
Harry Sit says
The trust document prepared by our lawyer literally said at the top such-and-such Trust Agreement, and in the opening sentence “This trust agreement is made on [date] between …” So I went with U/A. If your trust document says Declaration of Trust, go with U/D/T.
Jacquie Traub says
Ut oh! I jumped the gun and used your phrasing for our Trust account, and in fact, our Trust does say “declaration of trust” (not “under agreement.”) For individual accounts, you can edit registrations using the ManageDirect menu opton. But the Trust accounts do not include that option. Do you know a way to edit the registration of an established Trust Account that has a savings bond already purchased? Thank you for your help.
Harry Sit says
I don’t know how important that wording is or whether it’s a minor change that customer service can make for you. Please call TreasuryDirect customer service at 844-284-2676 during business hours.
Harry Sit says
Someone reported having long wait times on the customer service line. If you don’t get a reply via email, you can use FS Form 5446 to make changes to an entity account.
Don says
You would think the actual Trust paper work has to match the TD registration exactly to avoid issues when one really has to switch control under the trust. Just fudging the name on the reg just does not seem smart!
Tony says
We have the word “AND” in our joint trust name, does TD allow me to open a trust account immediately? or they need to do documentation verification like they do the signature guarantee for individual accounts?
“if the joint trust has two trustees and the name of the trust has the word “AND” between the trustees, TreasuryDirect wants to be sure that the trust allows either trustee to act alone on behalf of the trust (versus requiring the consent of both trustees). They want documentation to demonstrate that’s the case.”
Harry Sit says
Go ahead and try it. If they require documentation right away before you get to buy bonds, you can’t escape it. Otherwise you can mail in the documents after you buy bonds. See the official instructions for what documents they need and where to mail them.
https://www.treasurydirect.gov/indiv/help/tdhelp/help_ug_292-entityaccountslearnmore.htm#Trust
Don says
Anyone know of a DIY trust that lets you assemble the name of the trust in an acceptable manner for TD? I tried Quicken but just had some Generic family trust name, like all attorneys I have talked to wanted to do.
Harry Sit says
See comment #15 and the updated examples in the post. The name of the trust is included *as a part of* the TreasuryDirect account name. You can still give your trust a generic name.
Steve says
For opening up the Ibond for Trusts, is there any reason I can’t create an ITF with my spouse as beneficiary, and have her set up one with me as beneficiary. Or does it have to be a family type trust with the declaration for the additional 10k?
Harry Sit says
You need a formal signed and notarized trust document before you open a trust account. The trust document can be an individual trust or a joint trust.
Steven Crisp says
So my revocable trust has a name that is 62 characters long (because our full names are explicitly included in the trust name). I tried to follow your naming instructions, and ran out of space (because we have to list both of our names two more times). Am I missing something? What happens if the name cannot fit in 150 characters? Thanks in advance for a quick answer (from Harry, or anyone who feels they know the answer) — I’m hoping to get this account opened this year so I can purchase additional iBonds in 2021.
Harry Sit says
Based on comments #28 and TD FS Publication 0049, if your document is a Declaration of Trust, it appears the “by …” part can be omitted because it’s implied that the trustees and the grantors are the same in a Declaration of Trust. That publication has some more examples for the trust registration.
Steven Crisp says
Thanks Harry, that was helpful. Looking at that reference, I followed this example:
“Trustee’s name” trustee under declaration of trust dated “date of trust instrument.”
So, in our case it was “My name” and “Wife’s Name” Co-Trustees under declaration of trust dated “date of trust instrument.”
So far that has been accepted, and I was able to schedule a purchase of $10K I Bonds this year. Hopefully no issues down the road. If they follow up for the actual trust document, I have no problem providing that to them. “Co-Trustees” was the term used in our trust, which is why I used it here.
Lou Petrovsky says
I have several revocable living trusts. All the income is reported under my personal SS number. Will all of them qualify for the purchase of $10,000 I-Bonds annually, or only one such trust per year?
Harry Sit says
Buy in one trust first. Then check with customer service at 844-284-2676 on the others. I would argue all of them should qualify because they’re different entities under different trust documents, but check with customer service and see what they say. Be sure to report back so I can update this post to help others in the same situation.
Jacquie Traub says
My husband sent this question to Treasury.Direct via their email address.
From: J Traub
Sent: Saturday, December 18, 2021 9:35 AM
To: [email protected]
Subject: Trust Accounts
“I have two different trusts with the same TIN which is my social security number, but with different Trust names and purposes. Can I have Treasury.Direct accounts for both trusts, each with their own $10,000 purchase limitation? Thanks for your help.”
This is the response I received.
“From: [email protected]
Sent: Wednesday, December 22, 2021 5:07 AM
Subject: RE: Trust Accounts
Yes, John. You should be able to.
Barry
Securities Agent”
Note that it takes a few days for a response.
Harry Sit says
Nice. Thank you for sharing!
Jacquie Traub says
I can confirm that indeed, you can have Treasury.Direct accounts for multiple trusts that have the same social security number for their TIN. My husband and I both already had Treasury.Direct Trust accounts and we just opened two more trust accounts today that used my SS number and my husbands SS number respectively. So we now have a total of two trust accounts each using our respective SS numbers. The various trust instruments have different names and dates.
Joe Smith says
According to the IRS, “Separate EINs are needed if one person is the grantor/maker of multiple trusts…However, a single trust with several beneficiaries requires only one EIN.”
Source: https://www.irs.gov/pub/irs-pdf/p1635.pdf (bottom of page 8).
I don’t this applies if one and their spouse have only an individual trust each and a join trust. However, it sounds like if one were to create multiple independent revocable trusts, then one would have to request a different EIN for each of them. Does anyone have an opinion on this?
(It seems easy enough to request the EIN, as you can do online with IRS. I believe you have to have created the trust in question first. )
Another question. Say one creates several individual revocable trusts. Say one trust will have you book collection, another trust your vintage clothings, another your musical instruments, etc. Technically, I believe one could just put all such items in the same trust and assign the same or different beneficiaries for each. But say one wanted to put each of them in separate trusts for whatever reason. As far as I can tell, one can create as many individual revocable trusts as one wants and put whichever assets (with some restrictions or retitling necessary in some cases) one wants in each trust.
Does anyone have an opinion on this?
Harry Sit says
If a trust needs an EIN, separate trusts by the same grantor need separate EINs, but a revocable trust doesn’t need an EIN.
Gina says
Apologies if this has been covered already. Where on TD does one specify the tax withholding method for Bonds? We had setup our personal accounts many years ago and it is pay tax on maturity/withdrawal type. Not sure if that is the default. Now that I have setup the Trust acct (Huge Thanks to your instructions) I can’t seem to find info on the tax withholding for it. Any help on this matter is greatly appreciated.
Harry Sit says
Paying taxes on withdrawal/maturity is the default. TreasuryDirect doesn’t withhold taxes.
Gina says
Thank You!!! How does one change it to pay tax annually? TD is very vague about it. I looked at the following but no help there as to how to actually do it.
https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_itaxconsider.htm
Looks like they do allow withholding of taxes but again no instructions or Form #.
https://www.treasurydirect.gov/indiv/research/indepth/tbonds/res_tbond_tax.htm
Paying taxes annually is what I want for my child in his low earning years and withholding is what I was looking at for our looming tax numbers. Two different problems. I am getting cross eyed reading Google searches on this matter. There would be a good market for a book on TD Bonds written in simple words, answering common needs. Hint! Hint!
Harry Sit says
The second link is about Treasury Bonds, not Savings Bonds. The first link is about Savings Bonds but the word “withhold” doesn’t appear anywhere.
Paying taxes annually works in theory but it’s very difficult to pull off in real life. It’s made difficult by these factors:
1) TreasuryDirect doesn’t issue any monthly or annual statements showing interest earned during the period. Just finding out what your bonds were worth as of the end of last year when you’re doing taxes in March is a challenge.
2) The value displayed in the account excludes interest earned in the last three months when the bond is within its first five years but you need to report that interest if you choose to pay taxes annually.
3) Interest rates change every six months but in different months for different bonds depending on the month of purchase. It’s difficult to calculate how much interest your bonds earned during the year.
4) The interest you report on your tax return is for the sum of all your bonds. If you cash out only one bond but keep the others, it’s difficult to figure out how much interest you already reported in previous years for that one bond you cashed out while you have a 1099 form showing all accrued interest to date for that bond.
5) If God forbid something happens to you and someone else has to do your taxes, they may not know you’ve been paying taxes annually and it’s very easy to pay taxes again when they have a 1099 in front of them.
6) If you pay someone to do your taxes, the extra tracking required to calculate interest annually easily costs more than the tax savings you may receive on a child’s tax return.
With all these complications, I say forget it. Just go with the default and pay taxes on withdrawal.
Lou Petrovsky says
For those of us who have elected to report interest on our tax returns on an annual basis:
We can track the value of each bond using a spreadsheet like Excel, using separate columns for principal and interest. The actual bond values, including accumulated interest on each bond, can be obtained at the end of each year using the Treasury’s site https://www.treasurydirect.gov/BC/SBCPrice
The site allows us to build, print and even save our bond inventory at the end of each year using December values, because bonds held for even one day in December earn interest for the entire month of December. On our spreadsheet we use separate columns for accumulated interest at the beginning of each year (= the end of the previous year), the end of the year, and the difference between end and beginning of the year, which is the interest earned for the year. Bonds redeemed during the year are input as well, except that we enter the redemption amounts instead of end of year values, so the current year’s interest is the difference between the redemption proceeds and the beginning of year values. By January 31, 2022, the Treasury (or our bank, if we redeemed bonds at our bank) will send us a Form 1099-INT showing the accumulated interest included in the total redemption amounts. When we prepare our 2021 tax return we enter the 1099-INT amount so the IRS can match it with the copy it receives from the issuer, then, on the next line, we back out the accumulated interest on those bonds as of the beginning of the year, with wording like “Minus – Reported in Previous Years” so that we are taxed only on interest earned in 2021. If spreadsheets are not our thing we should consider hiring a tax pro to do the computations, though of course that comes with a price. Either way, we need to realize that electing to pick up interest annually does mean having to keep careful track of each bond we own on an annual basis. As Harry has indicated, neither the Treasury nor the banks will do it for us.
Harry Sit says
The Savings Bond Calculator is helpful, but it’s explicitly stated as “for paper bonds only.” Also, the December redemption values don’t include interest in December. Holding a bond on December 1 and redeeming it on December 2 doesn’t earn the interest for December. You have to set the as-of date to January to include interest in December. For bonds within their five years, the redemption values don’t include interest earned in the last three months. It needs to be included if you’re reporting interest annually. The as-of date should be set to April for those bonds. If you do any partial redemption, you need some more adjustments.
Gina says
Good Lord!! Thanks a million for the advice! Yes. It would be a major headache to pay taxes annually on the Bond interest. Will not do it. Again, nowhere do I see advice like this. As for the links I included in my post above, sure glad I asked you. Else would have gone down another rabbit hole. Thanks again for everything you do to educate people on finance matters.
Ami says
Great, helpful article!! Sorry I could not find this answer in the Q/A comment section, apologies if I missed it. I have an individual TD account already using my SSN. I buy 10k I Bonds each year in that account. I also have a sole proprietorship and a revocable living trust. I have not opened any TD entity accounts for either of those, but are you saying that I could buy 10k under a TD entity account for my sole proprietorship, plus ALSO another 10k for a TD entity account for my revocable trust? So does this mean I can actually be buying 30k Ibonds per year under my SSN? Thanks in advance for any clarity!
Jacquie Traub says
That’s exactly right. The SSN is only one part of the account registration. The different names and types of entities qualify for their own account with the $10,000 purchase limit each. I have two separate revocable living trust accounts and an individual account, all using the same SSN, each with their own $10,000 bonds. But if I wanted, I could add a sole propietor account, or any of the other entities listed on the entites page at Treasury.Direct (assuming I had the type of entity/business listed.)
Lou Petrovsky says
“The Savings Bond Calculator is helpful, but it’s explicitly stated as “for paper bonds only.”
Agreed, but I found it can still be used for electronic bond calculations, though it cannot be used to print out and/or save our bond inventory. That was why I suggested creating one’s own spreadsheet, though admittedly it can be a hassle and may not suit everyone. We can use one of the face value (for I-Bonds, the principal) denominations on the calculator (say $1,000) as base amounts, then compute our bond values as of the required date using that base. Example: long ago, I had purchased I bonds electronically with a face/principal/issue value of $10,000 and in 2020 I redeemed $2,000 (total proceeds). My Treasury Direct account broke out principal and interest of $1,550 and $450, respectively. At that time I was able to prove that breakdown by using the paper bond calculator as follows:
Using $1,000 face as a base, the calculator came up with a redemption value of $1,290. Therefore, the total value of $2,000 included principal of 1,000/1,290 x 2,000 = $1,550, and interest of $450. So, those numbers matched the amounts shown on my electronic account to the penny. The adjustments that you noted would be needed for bonds less than 5 years old and for very recent purchases would need to be computed on a separate worksheet and transferred to the main worksheet. Again, I have to concede that all this effort may not suit everyone. For those who have elected to be taxed on an accrual basis and forego the default tax deferral, the annual Forms 1099-INT numbers for interest reported by the Treasury and/or bank can be compared with the computed amounts, though of course that will happen only in the new year.
Wishing you a Very Happy and Safe 2022!
Andy N. says
Is it possible to purchase Series I bonds in an IRREVOCABLE Trust, and if so are there any differences in the registration process? Happy New Year!
Harry Sit says
An irrevocable trust also works. See comment #16. The linked bank account probably should be in the name of the trust to keep the money within the trust after cashing out.
Ace M says
Is there a HOW TO on getting a qualifying i bonds trust for a single individual with no family? I am a disabled vet so all my income is tax free, i am the founder of an animal rescue non profit, i could temporarily name the NP as the trustee if that at all helps
I currently do not want to purchase any i bonds under the NP name and EIN
Harry Sit says
See Create a Simple Revocable Living Trust with Software for I Bonds. The referenced software and book work for both single individuals and families.
Steven H says
I would like to report savings bond interest annually to the IRS, and after reading the comments by Lou Petrovsky and Harry Sit, have a question.
I made my first savings bond purchase in November 2021 of $10,000 in electronic bonds. In the future I plan to buy both paper bonds with tax refunds and electronic bonds. I already use Excel for my personal finances and would like to use it to keep track of interest.
To find out how much interest to report to the IRS for the 2021 tax year, in the Treasury Direct calculator I entered an as-of date of April 2022, an issue date of 11/2021, and a denomination of $1,000. It gives an interest amount of $11.60, corresponding to $116.00 on $10,000. I then used Excel: 61 days (November + December) / 365 days * 7.12% * 10000 = 118.99. Wondering whether the calculator was looking at Feb + March, I tried 59 days, which gives 115.09.
What is the correct calculation?
Thanks.
Harry Sit says
TreasuryDirect calculates accrued interest off of a $25 base unit, rounds to the nearest cent, and then scales up to larger amounts. For two months of interest on $25 at 7.12% annualized interest rate:
25 * (1 + 0.0712/2) ^ (2/6) – 25 = 0.2932 => 0.29 after rounding
Scale up to $10,000: 0.29 * (10000 / 25) = 116
Now, it’s debatable which exact months you should use to calculate the increase in redemption values:
A) December to December (includes interest from December of the prior year through November, excludes last three months in the first five years);
B) January to January (only includes interest through September in the first year, 15 months of interest in the fifth year);
C) April to April in the first five years, January to January after five years (12 months of interest in all years).
If you decide to report interest annually you have to accept the ambiguity in exactly how it’s supposed to be calculated.
Steven H says
Harry, thanks for your response. Is this method of calculation documented anywhere? In comparison to calculation using actual days held, this sometimes results in slightly less interest.
For IRS reporting, I am thinking of using the following method that will reflect what a 1099 would show for a redemption the January following the tax year, and avoids reporting interest not realizable in such a redemption. Please let me know whether this method seems reasonable to you. My understanding is that in an ambiguous tax reporting situation, the IRS will accept a method with clear rules that are arguably reasonable.
– Within the first 5 years: Do not report interest for the last 3 months of the tax year, but report that interest next tax year. For each tax year, report the first 9 months + the last 3 months of the previous tax year. To obtain the incremental interest in the Treasury Direct calculator, the issue date is October of the previous tax year, and the as of date is the January following the tax year. For my bond purchased in November 2021, for 2021 there will be no reportable interest, for 2022 there will be 11 months (11/2021 issue date, 1/2023 as of date), and for each of the subsequent 3 years, 12 months.
– In the year of the 5th anniversary: report the entire tax year + the last 3 months of the previous tax year (15 months). In the calculator, this will again be October to January; the calculator will now not omit the last 3 months.
– Thereafter: the entire tax year (12 months), January to January.
Treasury Direct’s lack of annual and monthly statements is surprising. In a brief search I did not find online or downloadable calculators for this purpose, but found references to a Treasury Direct Savings Bond Wizard that is no longer available, that apparently offered more functionality than their present calculator.
Annual tax reporting is doable for me in Excel; I readily put together a simple spreadsheet that will get increasingly unwieldy over the years with more bond purchases, but should remain viable. A cleaner solution and/or monthly tracking would require more effort. I can use the Treasury Direct calculator to confirm the accuracy of the spreadsheet.
Harry Sit says
Interest rates change every six months and rates change in different months for different bonds depending on the issue date. A bond issued in January will have a different mix of rates than a bond issued in March. You should keep the true issue date for each bond in the calculator and not use October as the issue date for all bonds. Save your list of bonds in an HTML file (read instructions on saving inventory with Firefox). If you decide to use January-to-January, go with the redemption values as of January displayed in the official calculator. Compare with the redemption values as of January last year. Save a screenshot as your documentation. Don’t try to reproduce the redemption values on your own (too error-prone and can’t serve as the official values).
Lou Petrovsky says
Steven H, your suggestion makes sense. There is no requirement for investors who elect annual reporting of interest to notify anyone except the IRS that the election was made, so no form 1099-INT will be issued by the Treasury or the banks until, some day, the applicable bonds are redeemed and a Form 1099-INT is issued, at which point one will need to reconcile the Form 1099 amount with the aggregate of all amounts reported on the prior tax returns, and the difference will then need to be backed out on a separate line of the tax return (currently, IRS Form 1040, Schedule B, Part I). Because of the ambiguity issue the IRS will likely accept the annual numbers reported as long as the method used is reasonable and is used consistently.
After year #5 the computations are much easier. We can compare our own annual calculations with the January through January and December through December redemption values returned by the Treasury’s paper bond calculator. I found that the January through January numbers came closest, with a difference of only 20 cents. The Treasury rounds all their calculations to denominations of 20 cents. The December through December numbers were off by much larger amounts, so the January through January numbers make more sense.
Dunmovin says
Harry, read all the posts above and I’m still a bit confused on Account Manager name on Trust registration. My spouse and i have… A or B, Trustees under The …Trust for a TD account. A is identified as the Account Manager with her Soc number. There seems to be only one Account Mgr permitted but when one thinks that either A OR B could act on the account there would “seem” to imply that two should be ok since it is conjunctive (not “and”) otherwise it is only death with a death cert and form 5446 to put him acct mgr. What am I missing. How can either of us act on the TD trust account? Thanks
Dunmovin says
Harry, I think on reread my post 46 above should be deleted…let me try again, if I may.
Read all the posts above and I’m still a bit confused on Account Manager name on Trust registration. My spouse and i have… A or B, Trustees under The …Trust for a TD account. A is identified as the Account Manager with her Soc number. There seems to be only one Account Mgr permitted but when one thinks that either A OR B could act on the account there would “seem” to imply that two should be ok since it is disjunctive (not “and”) otherwise it is only death with a death cert and form 5446 to put him acct mgr. What am I missing. How can either of us act on the TD trust account? Thanks
PS I might as well set up another/new trust but with B or A and have B be Acct Mgr… OK?
Harry Sit says
Their system only allows one account manager for an entity account. Just adding another name to the name of the account won’t change their system. You can change the account manager to B while A is still living.
Setting up a new trust and creating a separate account for it works.
Leslie A. says
Thank you for all this great information! My husband and I just made separate revocable living trusts. We’ve already each purchased $10,000 in personal ibonds and yesterday I purchased another 10,000 in my trust and was planning on purchasing another 10,000 in my husband’s trust but I wonder if the name of the trust (which my attorney gave me) is adequate for this process. These are our trust names:
The (MY NAME) Revocable Living Trust, dated 1-14-2022
The (HIS NAME) Revocable Living Trust, dated 1-14-2022
I’m not seeing any reference to grantor or trustee. Mine went through without a hitch with my ss number but now I’m pausing before doing his.
Should there be more info to our trusts names when I purchase his ibond? Will I receive some kind of notification from TD saying that my bond was incorrectly purchased?
Thanks again!
Harry Sit says
The name of the trust from your attorney is what it is. TreasuryDirect doesn’t want to change that. They only say how the bonds should be registered. Depending on whether the trust is a Declaration of Trust or a Trust Agreement, the registration can be:
His Name, Trustee, [Name of the Trust] U/D/T dated [Month Date, Year]
or
His Name, Trustee, [Name of the Trust] U/A with His Name dated [Month Date, Year]
Jacquie Traub says
Hi again Harry,
From the article: “The new trust account needs a linked bank account. The bank account doesn’t have to be under the name of the trust. It can be the same personal bank account linked to the grantor’s personal account at TreasuryDirect.”
When it comes time to redeem bonds registered to a TD trust account, will the bonds seamlessly be deposited back into the linked bank account, even though that linked account is not titled to the trust? I’m wondering if the redemption is sent to the linked bank in the name of the trustee, and if so, would there would be an issue with the receiving bank since the linked account is not titled to the trust?
Harry Sit says
I have a personal bank account linked to a trust account at TreasuryDirect. My purchases went through fine and I don’t expect any problem with redemption either, although I haven’t redeemed any yet. I have trust accounts at brokerage firms linked to a personal bank account and I never had any problem with transfers both ways. Any specific bank can accept or reject transfers based on their own rules but I don’t think it’ll be an issue in general.
In a typical revocable trust, you’re allowed to put money into the trust or take money out of the trust as you wish. You’re doing just that when you transfer between the trust account and a personal account. Of course if your trust has a bank account, go ahead and link that one. That way the money will stay in the trust at all times.
Cathy says
Harry this was a great help! I have some follow up clarifications:
1. I have set up an account for myself and husband as joint. What happens if we both pass at same time? Does it just pass into our trust?
2. We each have a family trust in each of our names. In addition to our joint account I was going to purchase a trust account for each of us. It sounds like I can transfer bonds between joint ownership and trust. What is the benefit of transferring everything into trust or vice a versa? With the transfer does the account registration change?
Thank you for your help!
Harry Sit says
The personal account can’t be joint. You can add a second owner to the bonds you buy in a personal account but the account itself is only in one person’s name. If both owners die at the same time, the bonds in the personal account go to the owner’s estate (not to your trust).
Please read the section “Keep Them Separate” again. Don’t transfer until you’re done with buying all the I Bonds you want. Decide at that time whether you want personal accounts or trust accounts. Most people with a trust want assets in their trust because they set up the trust for a reason.
Cathy says
Harry thank you for the clarification. The way I understand it is that my estate passes through my trust. So does it really matter how the Ibonds are registered?
I’m going to going to open an account with a second owner and one for each of our trusts. For simplicity down the line it would probably be easier to have one versus two registrations but maybe I am overthinking it.
Harry Sit says
Where your estate passes is determined by your will, which has to go through probate. How long it takes and how much it costs to complete probate depend on where you live and the size of your estate. Assets already placed in a trust and assets with designated beneficiaries don’t go through probate.
cathy says
Harry thank you for the clarification! That helps. Since accounts with a secondary owner would have to go through probate if both of us pass, eventually transferring all of our ibonds into a trust would be the way to avoid probate.
Dan McCarty says
Thanks so much for your good work on this topic Harry. I read the post and then the comments. I believe my wife and I can open 6 accounts; one for each of us personally, one for each of our two trusts, one for our 12 year old daughter, and one for the S Corp that is 100% owned by my wife and me. Does sound correct?
Dan
Harry Sit says
That’s correct. To be clear, the account for your 12-year-old daughter has to be created under a parent’s personal account as a “minor linked account.” All access to the minor linked account is through the parent’s personal account.
bws92082 says
I created the Trust account. But I can’t link it to my main TD account. When I followed the instructions to create a custom linked acount, it just created yet another unrelated account unconnected to the Trust account.
Harry Sit says
It’s not supposed to be linked to your personal TreasuryDirect account. The personal account and the trust account are two separate accounts. Keep them separate.
bws92082 says
Ok, I thought that might be the case. It seems to needlessly complicate matters to prevent linking and require multiple logins and account numbers. It makes it much more likely your account will be overlooked by your heirs (or yourself) when accounts are spread out all over the place in a disconnected fashion.
bws92082 says
Your example for declaration of trust says “Person A or Person B, Trustees, [Name of the Trust] U/D/T dated [Month Date, Year]”, but all the examples provided at TD and in this link (TD FS Publication 0049) merely list the name of the trustee which is NOT followed by the [Name of the Trust]. Can you confirm?
bws92082 says
So are you saying it definitely needs to be like this:
“John Doe, Trustee, Living Trust of John Doe U/D/T dated March 15, 2022”
(And if you skip the same of the trust will that be a problem?)
Harry Sit says
Your trust has a name. The registration has enough space for it. Even if it isn’t strictly required, why not make it clear the account is for that trust? If you don’t have enough space, then omit the trust name.
bws92082 says
Yes, that definitely makes sense. But the government doesn’t always make sense, and I would worry that not following their silly arbitrary rules exactly might confuse them and cause them to botch the account.
Steven says
Love your articles on iBonds Harry, very helpful. The Quicken Willmaker & Trust Program indicates that items must be transferred into the trust with a transfer document. Even specifying that US Govenment Bonds be transferred and suggesting contacting your broker. Now I’m assuming that these transfer documents are for bonds that were issued and existed outside the Trust, while iBonds issued to the Trust would not need to be transferred in with a transfer document since they have only ever existed in the Trust. Am I correct in my assumption? Thanks.
Harry Sit says
That’s correct. Everything you buy in a trust account already belongs to the trust.
Anonymous says
Two questions:
1. If I buy $5K of paper I bonds via the tax refund, I assume I can then transfer it to my existing online account?? But more importantly, will that transfer reduce my purchase limit for the online account to $5K for the year of transfer?
2. Let’s say I accumulate the paper I bonds for 4 years (totaling $20K). Can I then transfer all $20K in one transfer? i.e. am I limited to transferring $10K/year?
TIA
Harry Sit says
You can deposit paper bonds to your online account. It doesn’t use up your purchase limit in your online account because you’re only consolidating bonds you already own, not buying new bonds. There’s no time limit or dollar limit for depositing paper bonds. See How To Deposit Paper I Bonds to TreasuryDirect Online Account.
Steven H says
I do not currently have any trusts, but would like to set up multiple trusts (possibly 3) to buy I Bonds. I may later add other assets. I am single. I have both the Clifford book and Willmaker.
Questions:
1. Do I need my full middle name in the trust documents, or is the middle initial sufficient?
2. How can I name the otherwise identical trusts to differentiate them? How about successive numbers, e.g, The John R. Doe Revocable Living Trust #1?
3. To distinguish the trusts from each other in Treasury Direct account registrations, I can create the trusts on different dates, and not have to include the trust names in the TD registrations, since the dates will differentiate them. However, it would be easier and cost less in notary fees to create all the trusts on the same date, and include the trust names in the TD registrations. Would this work?
4. As for what to put in the trust property list, in the create a trust with software post, a reader commented “‘U.S. Treasury I Bonds acquired in the trust’s name.’ Note that this doesn’t specify whether the bonds are acquired before or after the date of the trust, so no need to amend after buying the bonds” This sounds reasonable. Is this OK?
Thanks.
Harry Sit says
I’m not a lawyer. You’ll have to make a judgment call on (1) and (2) if you can’t find answers in the Clifford book or Willmaker. To your question (3), the name of the trust is more meaningful to me than the date. I’ll want it in the registration if I have enough space for it. See reply to comment #55. I put in my property list “TreasuryDirect account ___________.” Then I filled in the account number by hand after I opened the account.
Anonymous says
If I own I Bonds and T Bills in my TD personal account and want to transfer ALL I bonds in the account to an irrevocable trust.
The transfer form has 3 options: Transfer (1) ALL securities in the account; (2) securities described on the attached list; or (3) the securities described below.
Can I elect option (2) and just say ALL I Bonds in account?
Harry Sit says
I don’t know. I would just copy the I Bonds holdings to an attached list to make it clear and explicit which ones I’d like to transfer.
Anonymous says
I Bond owners can elect to recognize income on an accrual basis. I was informed by TD that if I make that election, the Accrual method will apply to All I bonds I own — including future purchase. If that true for the lifetime of the account? e.g. I sell all my I bonds; then 6 mos later, I bought more I bonds. Am I still required to use the accrual method?
And If I own I bonds in my personal account and a trust account, can each account elect its own method — i.e. one on cash method and the other on accrual method?
TIA
Harry Sit says
How to recognize income for tax purposes is a matter with the IRS. It’s not linked to your TreasuryDirect account. It applies to you as a taxpayer. Your personal account, your revocable living trust, and if you’re married filing jointly, your spouse’s personal account and revocable living trust, are all included.
The IRS describes Method 1 and Method 2 in Publication 550 (starting on page 7). You can change back and forth, but my impression is it’s a calendar year by calendar year election. The default is to postpone (Method 1). If you choose to start paying every year (Method 2), you pay up all the postponed interest through that year. If you choose to go back to postpoing, you use a specific procedure described in Publication 550 to request permission from the IRS.
Method 2 is more complicated. See Taxes on I Bonds Get Complicated If You Go Against the Default.
Livia J Squires says
Hi Harry, I was curious about this line in your article: “Be sure to link a bank account that you’ll keep using forever.” What happens if, for example, I move to another state and wish to close the original bank account? Thank you!
Harry Sit says
You’ll have to get someone at your new bank to sign a form and apply an official stamp. Not all banks know what to do or agree to do it. See Where to Get a Signature Guarantee for I Bonds at TreasuryDirect.
Rishi says
Are you sure about the fact that the same bank account can be used for a personal and trust accounts? I’m not an attorney but some blog posts by attorneys seem to indicate that you are indeed required to have a separate bank account for each trust. This makes sense, as the trust is a separate legal entity and commingling of funds is usually a big no-no.
Harry Sit says
You’re not commingling funds. When you link a personal account, you’re adding assets to the trust when you buy or removing trust assets when you sell, both of which are allowed in a revocable trust. If you have irrevocable trusts or if you’d like to keep trust assets in the trust at all times, you need to link a separate bank account for each trust.
Anonymous says
According to the TD web site, more than one bank account can be used to fund an account. So does get around the problem of what happens if I want to close the original bank account used to fund the account? Thank you.
Harry Sit says
You get to add only one bank account at the time you open the TreasuryDirect account. You need to get someone at a bank to sign and stamp a form when you add another bank account. See reply to comment #62.
Ellbee says
Hopefully a simple question. I am confused by the distinction between a declaration of trust vs a trust agreement. I just set up a revocable trust for myself. I’m single so there is only one grantor (me) and one trustee (also me), and my trust document says “Trust Agreement,” not “Declaration of Trust.” You say at the beginning of this article that if the trust was set up by an agreement, you have to list both the grantor and trustee. But Pub 0049 says that if they are the same person, you use the wording “[my name] Trustee Under Declaration of Trust Dated MM/DD/YY” (it says nothing about declaration vs agreement). ALL of the examples given in Pub 0049 that use the word “agreement” include either more than one than one trustee/grantor or the trustee and grantor are different individuals. The only example where trustee/grantor are the same person uses the wording “declaration of trust,” which you seem to be saying is different from a trust agreement. So do I put “[my name] Trustee Under Declaration of Trust Dated MM/DD/YY” (which Pub 0049 says to use if the grantor and trust are the same person, but it does not address the declaration vs agreement difference) or do I use “[my name] Trustee Under Agreement with [my name] Dated MM/DD/YY”? Thanks!
Harry Sit says
Your trust document says whether it’s a declaration of trust or a trust agreement. An agreement with yourself is still an agreement. It doesn’t turn a trust agreement into a declaration of trust.
Ellbee says
Harry, that doesn’t answer my question on the wording though. Why don’t any of the IRS agreement examples use the same name? Their instructions just say to use “declaration” if grantor/trustee are the same person. There is no text that says that wording is for declarations only, not for agreements with yourself.
Harry Sit says
A declaration of trust and a trust agreement are two types of documents. Your trust document says which type it is. A declaration of trust has the same person serving both roles. A trust agreement can also have the same person serving both roles. Showing examples with different persons for the two roles doesn’t mean all trust agreements must have different persons or all documents with only one person must be a declaration of trust. When your document is a declaration of trust, use the template for declaration of trust. When your document is a trust agreement, use the template for trust agreement.
Chadk says
I’m clueless in this department too, but I found this explanation very helpful, where it states:
“If you are the sole trustee of the trust, the document with which it was created is called a “declaration of trust”. If there is an additional trustee, the document used to create the trust is called a “Trust Agreement”. ”
This would seem to jive with the info provided by TD.
Jacquie Traub says
Read your trust document. On the first page it will specify whether it is a declaration of trust or if it is a trust agreement. As Harry already said, use the wording for the type of document your trust is.
Roger says
My wife and I each have our own individual accounts. Yesterday, I set up trusts accounts. No issue. I made purchases yesterday under the trust and overnight received a message that it was rejected since I exceeded my annual limit? Not sure why?
Full disclosure…i also purchased gifts yesterday from our individual accounts . The rejection email didn’t reference which transaction was rejected but am assuming it’s for the trust purchase and not gift.
Harry Sit says
Check your accounts to see which purchase went through. Don’t assume. Maybe the gift you thought you were buying inadvertently defaulted to the registration for yourself?
Roger says
Thanks Harry. Surprisingly, I can’t tell after logging in to each account. All the $ are showing as if the transactions went through. I thought I would see the same message that was in the email but I don’t see it.
I noticed nothing is showing under the gifts section but this may be due to the 5 day holding period.
Harry Sit says
Click on History in the top menu, and then Security History. It shows a list of your purchase requests. Going into each request shows the registration in that purchase request. If your intended gift purchase has your name as the owner, and you already bought the full $10,000 for yourself, that explains why you received the email.
Roger says
Thanks. That might be it. registration shown my name under the security section. Odd because I setup my wife as the registrant and clicked ‘gift’. At least I thought I did.
Ustaad says
Currently, getting a refund takes sixteen weeks. I used the default registration instead of the one for the gift and had to wait for at least 8 weeks before I lost my patience. I called treasury and after over an hour wait got human agent on the phone and she edited the registration to make it as a gift. If you insist on getting a refund, it’ll take about 16 weeks and you’ll lose interest for 4 months.
Susan Gluck says
Hi Harry,
I’m not very knowledgable when it comes to buying an IBond for our revocable trust. In filling out the form, I got stumped on the date. Our trust is called “Amendment and Restatement of Name 1 and Name 2 Revocable Trust.” When we’re asked to include the date on the application form, should we put the date of the original trust (same names, and addresses, except we got married) or the date of the amended and restated trust? Thanks much!
Susan
Harry Sit says
The original date.
Susan Gluck says
Thanks so much! I feel so lucky to have run into the Finance Buff and your information about IBonds. What a difference this has made to my outlook (and feeling of well-being)!
Frank says
Regarding the individual trusts for married couple, can I just put a portion of my individual assets say my Roth IRA or 401K into the trust for her to manage or do I have to put my total asset (individual retirement + taxible accounts) into the trust?
Harry Sit says
Her trust doesn’t need any other assets except the I Bonds it’ll buy.
Brian says
I’m confused by the “the trust cannot be the beneficiary” statement. Planning to buy $20K under two personal SSN’s for married couple. It think I will use the And/Or naming processing for ownership (person A and/or Person B). I assume I will need a beneficiary and it can’t be the trust? Also, may want to buy $10K more in the trust name which wouldn’t need a beneficiary would it?
Harry Sit says
A TreasuryDirect account can’t name a trust as the beneficiary for the I Bonds it owns. The beneficiary has to be a person. A trust’s TreasuryDirect account can’t name any beneficiary. The trust itself of course has beneficiaries in the trust document.
Mary C Levins says
If the TreasuryDirect account is in the name of a revocable trust, will a 1099 be issued to the trust?
Harry Sit says
When the trust redeems I Bonds, yes.
Andy K. says
Further to Comment #18 above…. You state that TD does not like the approach of transferring an I-bond from a personal account to a trust account in the same year that a person buys the maximum in both a personal account and a trust account. What if the personal bond being transferred to the trust account was originally purchased during the prior year ? If that is possible, then could one do a “rolling” process whereby every year you transfer the bond from last year’s personal account to the trust account this year (while still funding a new personal account and trust account this year) ?
Thanks for all the info and helpful responses !!
Harry Sit says
A transfer counts toward the annual purchase limit of the receiving account. It doesn’t matter whether you’re transferring old or new bonds.
Brooke says
Hello,
I have an individual account where I have I bonds. I just learned that I can open another account with my living trust that I have had for many years. This trust does not have a different EIN number. I am assuming I use my SSN, but I have no idea what the IRS name control number is since my accounts titled under my trust it is filed in my personal return with my SSN.
I also have another GST exempt trust in my name that was created after my mom passed. That trust has a different EIN number but I cannot figure out what the IRS control number is for that trust is. My concern is what if I put the first 4 letters of my last name for both trusts as the irs control number. Will that be a problem. Thank you in advance. Brooke
Harry Sit says
The IRS Name Control for a trust is the first four letters in the name of the trust. Many people with different tax IDs have the same first four letters in their last names. It’s normal to have the same IRS Name Control in different accounts.
Brooke says
Thank you so much for responding so quickly!! So for example, if one trust was called the Jack Jones living trust and the other was called the Jack Jones GST exempt trust under ………. So then the name control for both; one with a SSN and the other with an EIN number would be JONE. I am just asking because I saw some examples where the name control was the first 4 letters of the first name.
Harry Sit says
The IRS says this about the Name Control:
“If you did not use a business name and instead used your individual name, your name control will be the first four letters of your last name. … … If you applied for your EIN using a business name, the name control is assigned from the first four characters of your business name.”
https://www.irs.gov/businesses/small-businesses-self-employed/how-your-name-control-is-assigned
Therefore Jack Jones living trust using Jack’s SSN should use JONE. Jack Jones GST exempt trust using its EIN should use JACK.
Brooke says
Oh, I did not know that a generation skipping trust created for a child of a deceased parent was considered a business. It is so confusing??
Harry Sit says
The trust isn’t considered a business. That page happens to be for businesses, but it shows how the name control is assigned for an entity versus a person.
MIckie Pitts says
The article states “If you see I Bonds as an investment, it’s true you can’t dump $500,000 into I Bonds in one shot?” Can you explain how this can be done? This would be done in a Revocable Trust.
Mickie Pitts says
Adding to the question the max amount is still only $10,000? What if you have a Personal Account can you still purchase them in the trust?
Harry Sit says
The annual limit is $10,000 per trust. You can buy $10,000 each in your personal account and trust account.
ed says
Hello
To buy extra I-BONDS before end of APRIL, can I go ahead and buy them under the upcmoning revocable trust and then create the Trust ASAP.
In fact I have the Trust created, but have to do notary.
Thanks
Harry Sit says
No, your trust doesn’t exist until you sign it in front of a notary. Having it notarized takes no time though. You find a notary public in a UPS Store near you.
Frank says
Opening a trust account seems simple but I do not have a question regarding “Account Manager ” of an individual Trust Account
In a Revocable Living Trust of the State of Connecticut, the Grantor (Husband) also serves as the primary trust and the Acting Trust while the Grantor (Husband( is not incapacitated. Only under the death of or during incapacity of the Grantor (Husband), then Wife will serve as the Acting Trust.
So the question about opening a TreasuryDirect trust account, who is the Account Manager? Husband or Wife?
Harry Sit says
Husband is the Account Manager. When Husband dies or is incapacitated, Wife changes the Account Manager to herself. See “After You Die” section in this post.
Frank says
My wife and I have two individual accounts. Can we create another joint trust and put joint asset (say rental Real Estate) into it and buy another $10,000 beyond the $20,000 purchased throughout individual trusts?
Harry Sit says
It’s addressed in the “Multiple Trusts” section. A person can have more than one trust. A trust can hold other assets but it can also hold only I Bonds.
Tom says
Hi Harry,
I called Treasury Direct and asked them this very question, as I have a trust with my wife using my SSN for the trust. They stated — I am paraphrasing — the amount of I bonds that are allowed to be purchased electronically is directly corresponded to each SSN. They said it doesn’t matter if that SSN is related to a trust or an individual and that, if I purchase in my trust that uses my SSN, I am not allowed to purchase in my personal account using the same SSN. So, for a married couple, that would be limited to 2x$10,000 maximum purchase per calendar year.
I am not saying the website stops one from purchasing more than $10k in I bonds for a SSN, but they stated very clearly, it is not allowed. If the trust had a different TIN, then, according to them, that would be allowed. Otherwise, theoretically, one could open multiple trusts and purchase multiple batches of $10k in I bonds…
Leslie says
I purchased ibonds for my husband and I at the end of last year and again early this year and then again in our newly formed revocable trusts (we have separate trusts) which use our SSN’s. The website did not stop me and I even emailed them to ask if I had used the proper name of the Trusts (I hadn’t and they corrected it for me). I have not been notified that it is not allowed to use my SSN to open more than 1 trust.
Tom says
Hi Leslie,
we can certainly use our SS# in a trust. Probably more than 1 trust (I don’t really know).
This comment was about the $10k limit on I bonds — being linked to one SSN (not linked to specific accounts). For instance, you cannot receive an additional 10K in I bonds as a gift, just because it was purchased in a separate account. Because the SSN is linked to purchase limits (according to what I was told).
Did you exceed $10k in I-bonds per social security number within a 1 year time frame? As in –are you saying you bought (up to) $20K in I bonds in the same year, under the one SSN? 10k of which was in a personal account and 10k of which was in your entity (Trust) account?
From my personal experience – personal accounts are not linked directly to entity accounts — they require different account numbers. And you have to login separately. So TD may not have a way of stopping you from making separate purchases (up to $10k in a given account) — I honestly have no idea.
My only point was, they explicitly stated exceeding $10k in I bonds — for a SSN — in a calendar year is not allowed.
The name on the trust isn’t a factor. The only factor they seemed to care about was the SSN/TIN.
Does this mean, we can physically do make the purchase of I bonds if the site let’s us? But we are not supposed to do so? What are the penalties for exceeding the 10K limit?
Tom says
Hi Harry,
Since what the Treasury Direct representative told me doesn’t match what is written above: “They allow you to do either one of the following but not both:
Buy $10,000 per calendar year in a personal account and another $10,000 per calendar year in a trust account; ”
Does that mean the representative had it wrong? Or that the site allows one to do so, but it’s technically not allowed?
Harry Sit says
Not all customer service agents know the correct answer. See comment 36 for a different answer from a different customer service agent. Go with whichever answer you feel is more credible. I’m going with what I wrote. I have both a personal account and a trust account using the same SSN. I bought $10,000 in each account in both 2021 and 2022.
Tom says
Thanks Harry. Found a few other discussions about this as well. Seems like the biggest issue is to not attempt to transfer the bonds from personal to trust and vice versa — at least not before one is finished buying I Bonds altogether, as you also indicated.
And also appears, different customer service agents “interpret” the rules differently, but either way, the online site generally allows each account: personal + trust to max out to $10k in I bonds . Thanks for this article, as I had called TD about this whole situation a while ago and was led astray…
Leslie says
Hi Tom,
Yes, to your question: Did you exceed $10k in I-bonds per social security number within a 1 year time frame? As in –are you saying you bought (up to) $20K in I bonds in the same year, under the one SSN? 10k of which was in a personal account and 10k of which was in your entity (Trust) account?
I created 2 different accounts- 1 for personal and 1 for the trust- and they had the same SSN. I put 10,000 in each for this year. My husband did the same.
Larry says
Let’s say my wife and I each have a personal TD account and we have a third account which is an entity account for our revocable trust so that we may buy a total of $30,000 I-bonds per year. The I-bonds in her account show me as co-owner; those in my account show wife as co-owner. If I die first, can she transfer all bonds held in my account to the trust account and continue annual purchases of I-bonds through both the trust and through her account? And what difference does it make if we list each other as co-owner vs beneficiary?
Matt says
What happens if I set up a trust for my I-Bonds, with my wife as beneficiary and both of us die? And if I DIY this, do I “add” in the I-Bonds when I set the trust up or leave it empty and amend it letter on Schedule A? Thanks.
Burt says
I believe there is no beneficiary available in the TD Account setup for a Trust.
The trust document provides what the successor trustee/s will do with the assets.
I left the TD account # blank in my Schedule A of assets to be in the trust until I set up the TD account for the trust and had the account number, which I then wrote on the schedule. My trust was a diy type using Nolo.com software.
Harry Sit says
You say in your trust who will be the trustee and who should get the assets when both of you die.
Frank says
Confirmed, Treasury will pay out 9.62% interest rate for the next 6 months
https://www.cnbc.com/2022/05/02/i-bonds-to-deliver-a-record-9point62percent-interest-for-the-next-six-months.html
Ami says
Thanks so much for this great information. We bought the book you recommended and created two shared trusts for purposes of buying I-Bonds. Since our trusts have both our names linked by “and”, I know we’ll need to send the pages of our trust documents in to Treasury Direct to demonstrate that one of us can act without the other within the trust. My question: can we buy I-Bonds as soon as we register our trust accounts with TD and send the paperwork in later? Or will they not allow us to buy I-Bonds until they receive the paperwork. We haven’t completed the trust documents yet. Is there an easier way to create shared living trusts and avoid having to send in the paperwork? Thanks again for all your help!
Jacquie Traub says
My husband and I also opened two shared trusts for the purpose of buying I-bonds. But we named our trusts without using both our names. We called them each something like: The Bluewater Security Living Trust. So we didn’t face that extra step of confirming that we could both act separately.
If you got the Quicken Willmaker & Trust book/program, they do name your trust using both your names connected with an “and.” Here’s the workaround:
In the last step of creating the document (“Previewing and Printing”), we clicked on the File menu at the very top and “exported” the trust into rtf format from which we could make changes, (although Nolo admonishes you not to.) We then changed the name of the trust to what we wanted. If you do that, remember to change the name throughout the trust document.
Ami says
Thank you!
Ami says
Dumb question: we used the downloadable forms from the Nolo book and it has a footer with page numbers 1 of 10, etc. that includes Schedule A (our only schedule) as the last page. But the Certification by Grantors and notary information is on the last page of the Declaration of Trust, which not the last page number listed on the footer since the footer page numbering includes Schedule A. Will this screw anything up if it’s notarized on page 10 of 11? Thanks for all your help.
Harry Sit says
You can remove the footer page numbers if that bothers you.
Ami says
Thanks for the lightening-fast response. It doesn’t bother me unless it’s an issue. The Schedule doesn’t need to be attached to the declaration of trust at all when the DT is signed and notarized, correct?
Harry Sit says
It needs to be attached but the notary public doesn’t read the content of your document or care about the page orders. They only confirm who signed the document.
Ami says
Do we sign Schedule too? Nolo doesn’t have any signature lines in the schedule. Thanks so much for your help! Sorry for all my questions.
Harry Sit says
You don’t sign the schedule. That’s why it doesn’t have any signature lines.
Paul Stifel says
We have purchased I bonds on two TD accounts over the years; we also elect to get $5K of paper bonds in lieu of a tax refund. We don’t want to buy more I bonds each year than we do now–we want to avoid probate in the event both of us die in the same event. Several questions:
–will transferring our holdings to Trust account(s) avoid probate, even if the value exceeds $100K?
–will we still be able to somehow make the $5K purchase from our tax refund each year? Can these paper bonds be titled to one of our trusts?
–if we both perish at the same time, the joint personal bank accounts we’ve used to fund purchases will be frozen or closed. Do we need to/or can we open a bank account in the name of our trust(s) before embarking on this activity?
–tax reduction is not one of our objectives, however we don’t want to increase the taxes in settling our estate. Will establishing trusts be neutral in this regard?
Thank you for your help and expertise, Harry.
Harry Sit says
If you already have a trust for your other assets, you can certainly open a new account for the trust and transfer your existing bonds to the trust account. Assets in the trust account avoid probate regardless of size. If you don’t need a trust for your other assets, and you’re not trying to buy more I Bonds, creating a trust only for holding I Bonds may be overkill. Naming an adult child or relative as the second owner or beneficiary on the bonds in your personal accounts also avoids probate. They’ll get an early inheritance in case one of you dies. The surviving spouse will live on other assets.
I’m not sure whether the paper bonds from tax refund can be issued to a trust. Form 8888 makes it sound like it wants a person’s name on line 5a.
If you’re concerned about the joint bank account, you can open a bank account for the trust.
Putting assets into a revocable living trust doesn’t affect your taxes.
Juan says
Hi Harry – Thanks for your great blog!
I created a Trust account at TD with a Declaration of Trust document where I am sole Grantor and sole Trustee.
I am trying to make things easy for my Successor Trustee and Beneficiaries by finding out what has to be done upon my death.
What happens to my Trust account at TD when I die?
1 Does TD allow somewhere in the online Trust account to name the Successor Trustee?
2 Can I grant “View or Transact” rights in my Trust account to my Successor Trustee while I’m alive
(I only see that individual accts allow View / Transact rights) ? https://www.treasurydirect.gov/indiv/help/tdhelp/howdoi.htm#grantview
3 Can my Successor Trustee get control of the account WITHOUT a probate court order? TD Form 5446 says Declaration of Trust document along with death certificate should be submitted in order to change the “Entity Account Manager” to the name of Successor Trustee, but not clear if court order is needed.
4 Will the Successor Trustee need to verify identity with a signature guarantee ( like some TD account applicants encounter)?
If anyone has gone through this process, I thank you in advance for sharing any details of your experience ( like how long the review is and whether certified copies are required to be submitted, etc.).
Thanks all, and again to you, Harry, for all your great blog posts.
Juan
Harry Sit says
The successor trustee is only named in your trust. TreasuryDirect has no place for it. You can’t grant View or Transact rights on bonds held in a trust account. The successor trustee doesn’t need a court order to take over as the new Account Manager after you die. Form 5446 requires a signature guarantee.
Matt says
Now that I’m on your site again – what’s everyone’s thoughts on this?
With trust software:
Create a RL trust for my wife where she is the trustee and grantor – her SSN
Create a RL trust for myself where I am the trustee and grantor – my SSN
Create a RL joint trust for the both of us where we are both the trustees and grantors (her SSN)
Upon simultaneous death, all of these trusts would feed into the joint trust agreement that we have via our lawyer? This is under my SSN already and I already purchased the max for this year.
That’s four separate trusts with two separate SSNs – would this work or not work? Or would I only be able to set up two trust accounts with our two SSNs. Thank you again everyone.
Harry Sit says
It works if you don’t mind managing additional accounts.
Matt says
Thank you again – I’ll think about this one first.
Paul Stifel says
Harry, you said, “They just don’t like it when you buy in both accounts and still transfer from your personal account to the trust. Either keep two accounts separate and buy in both or transfer and only use the trust account afterward.”
If you ONLY buy in your personal accounts, but periodically transfer ownership to your Trust, would that be OK with ‘Them’, do you think? The Trust holds, but never buys.
We don’t want to buy more bonds than we do now (two accounts plus tax refund), we just want to get them into a Trust to avoid Probate if we die together. We also would rather have a single Trust, not two.
This is a Trust just to hold I-Bonds. The Trust and the bonds in our personal accounts will have both of our names on them.
Thanks, Harry!
Harry Sit says
A transfer counts toward the annual purchase limit of the receiving account. It will work as long as you keep to that rule. For example, when you have two individual accounts between a married couple, A and B, and a joint trust account T, both individual accounts A and B can buy the annual $10,000 maximum for say 5 years. You transfer from A to T in year 6, and you transfer from B to T in year 7. That should work.
Paul Stifel says
I meant to say “TD Trust Account”; I think transferring I-Bonds to a Treasury Direct account for a Trust is a different situation than transferring to a Trust via 5511? Or am I misreading the intent of 5511?
Brian Berberet says
Please help me understand the mechanics of this example you present:
“When you’re done with buying the maximum in both accounts and you wish to only use one account going forward, you can complete the Transfer Request Form FS 5511 and consolidate your holdings into one account.”
Are you saying each spouse buys $10K of I Bonds in Year 1 and then in Year 2 they transfer the $10K+ interest in the individual’s account into their Revocable living trust, close the individual account and call it a day? OR are you saying that each account buys I bonds for a few years and then in year 4 or whatever they transfer all the $40k+ of assets from the individual account into the Revocable Living Trust account and then shut down the individual account and you refrain from buying $10k of I Bonds in the Revocable Living Trust in that transfer year? I will stop there even though I have a few more questions! Thanks!
Paul Stifel says
All three accounts stay open indefinitely. The personal accounts are ‘buying’; the trust account is ‘storing’ bonds transferred from the personal accounts (maybe leaving a single bond in the personal accounts to keep them open). I don’t understand why TD has no problem with buying in both types of accounts but doesn’t like transfers unless the accounts being transferred from are closed out. I guess we could transfer, close the personal accounts and then open new personal accounts–over and over.
Brian Berberet says
Paul I am not sure who you are or your expertise in this area. It is likely much more than mine! However you present 3 accounts where Harry only presented two accounts in his example, so already your reply seems a bit out of context to the example presented. I am going to defer to Harry’s reply if he is gracious enough to reply. Thanks in any case!
Harry Sit says
I was referring to an individual with both a personal account and a trust account. This person can buy $10k each year in each account. Say they want a total of $100k in I Bonds. So they do that for five years. Then they transfer the $50k from the personal account to the trust account in year 6 and don’t buy any in the trust account that year.
Brian Berberet says
Thanks so much Harry! That is what I thought and how I read your piece. A friend and I had a differing interpretation of what you shared and Treasury Direct’s information on the topic overall. It looks like he will be buying me a beer! Enjoy your site and I will definitely pick up a copy of your book.
Matt says
Hi again Harry – I did just open up a RLT for I-Bonds after going through your article. Have you heard of “warnings” given, or do you see any issues with, buying the max in both Trust & Individual accounts – say for five years – then closing the Trust Account in Year 6 and transferring all $50K to the Individual one? Would that put me over my Individual limit in Year 6?
Harry Sit says
That should be OK. Just don’t buy any in year 6 in the receiving account.
Brooke says
Hello,
In the year 2000, I purchased The max allowed 30,000 paper I Bonds. I never really thought about them until last month when they became popular again. Anyway, the end of April, I opened an online treasury direct individual account and an another account in my trust. I purchased the max amount in each account. I think it would be best to put the paper bonds in my account. Since they are in my individual name do I put them in my individual account?? Also, I am worried that they may get lost when I send them the treasury direct. I’ve had them for so many years in a safe place, so just concerned. On the other hand it probably would be safer to have them in an account. When people send their paper bonds into Treasury Direct, has the transfer process gone smoothly. Thank you in advance.
Harry Sit says
It’s completely up to you whether you keep the paper bonds as paper or deposit them into your online account. If you decide to deposit them to your online account, they go to your personal account. It takes about a month to process. See How To Deposit Paper I Bonds to TreasuryDirect Online Account.
Linda says
I read on the TD website that a court-ordered representative is required if your estate has more than $100,000 in PAPER i-Bonds when you die. Does this upper limit apply to electronic iBonds as well? (If not, you could have $250,000 in i-Bonds, for example, in your trust account without any such requirement, right?) If upper limit does apply, you could get around this problem simply by converting your $5000 tax-refund PAPER iBonds to electronic? (I believe you earlier stated such conversions don’t impinge on your ability to buy the full $10K worth the same calendar year in the account that receives the converted paper-to-electronic i-Bonds.)
Harry Sit says
A court-ordered representative is required only when the bonds in a personal account don’t have a designated second owner or beneficiary or the designated person also died. It doesn’t apply to bonds in a trust because a trust doesn’t die. Keep your second owner and beneficiary designations up to date for bonds in your personal account. See How to Add a Joint Owner or Change Beneficiary on I Bonds.
Linda says
I forgot to ask about iBond tax consequences after owner’s death:
In all cases (no matter whether you registered a co-owner or a beneficiary, or did neither, and whether your i-Bond was held in a personal or trust account), when the owner dies, will income taxes on all accumulated interest have to be paid at the time of the owner’s death? EVEN IF the i-Bond is not cashed, but instead is either kept in the trust account or personal account or distributed to a beneficiary? Thank you so much for your answer!
Harry Sit says
By default, taxes don’t have to be paid at the time of the owner’s death. Whoever inherits the bonds will pay taxes only when they cash out or when the bonds mature. See I Bonds Tax Treatment During Your Lifetime and After You Die.
John K says
Hi there – why the need/desire to setup a totally new TD account for a trust – couldn’t you buy them via the Gift option and leave them in your Gift Box until you’re ready to cash them out someday? That’s what we’ve done with various purchases for spouse/kids rather than setting up and having to track multiple accounts, logins, etc.
?
Thx/great work here.
Harry Sit says
It’s not mutually exclusive. You can buy in a trust in addition to giving gifts. You can’t cash out the gifts in the gift box. The spouse/kids will need separate accounts eventually to receive the gifts. See Buy I Bonds as a Gift: What Works and What Doesn’t.
John K says
Ah, the element I was missing that you highlight in your gift narrative is that a trust cannot receive a gift – therefore, gifting from a main account to a trust would not work.
There’s an interesting idea there about buying multiple bonds in a year and simply not gifting them across until years later (keeping them in the gift box/closet in the near term), allowing one to capture today’s rate as the gifts are cascaded across over time. Sort of like stocking up on them when they’re on sale b/c you know you plan to give gifts in the future….
matt says
Harry & everyone – Can you cash out more than $10K each year? I’m assuming the answer is yes, but would like to check with all of you who are more experienced. So if I have $20K in my personal account, $20K in a business account and $100K in a trust account – all of which have been held more than 12 months, I could – cash everything in all at once?
Harry Sit says
Yes, you can cash out as much as you want after holding them for at least one year.
K C says
I am specifically wondering if my brother’s special needs Discretionary Trust (FBO) can buy the $10k/yr in I Bonds? Thank you. (It has an EIN#)
Harry Sit says
TreasuryDirect doesn’t have any restriction on the type of trust.
Matt says
Good morning Harry. I have a question about the interest calculation. From #44 above, you wrote:
“TreasuryDirect calculates accrued interest off of a $25 base unit, rounds to the nearest cent, and then scales up to larger amounts. For two months of interest on $25 at 7.12% annualized interest rate:
25 * (1 + 0.0712/2) ^ (2/6) – 25 = 0.2932 => 0.29 after rounding
Scale up to $10,000: 0.29 * (10000 / 25) = 116”
MY QUESTION: Does this mean that in month 7 (when the rate goes up to 9.62%), the calculation would be:
25 * (1 + 0.0962/2) ^ (1/6) – 25 = 0.1965 => 0.20 after rounding
Scale up to $10356 (because it’s compounded semi-annually): 0.20 * (10356 / 25) = 83
I have not found a place that can explain this properly & after 2 hours of waiting, the Treasury representative was also not entirely clear with his explanation.
Harry Sit says
Not exactly. The compounding happens on the $25 bond. Then you round, and scale up. To be honest I don’t look that closely. Whatever quirky calculation used by the Treasury is already programmed into their system. Whether it’s $83 or $80, you get what their system says you get. The month-to-month rounding difference is definitely not worth waiting two hours to get an explanation for. Just trust the system and get whatever balance is displayed in your account or the official calculator (link in reply to comment #38 from Lou).
Brooke says
For newly purchased bonds that I got at the end of April, when you you see your interest compounding, at the end of the 6 months?? Thank you
Harry Sit says
It starts compounding in October although you won’t see it until Feb. 1. Again, trust the system. It’s working whether you see it or not.
Matt says
Thank you Harry for the clarification as always.
Henry says
Hi Harry,
If I’m using a trust to buy the bonds, do I buy the bonds once I come up with the trust name? then fully create the trust document listing the serial # of the bonds? Or would I need to create the trust document first, then buy the bonds? I’m under the impression that we need to list the bond’s serial # in the trust document, therefore we would create the document after purchasing the bonds. I appreciate your detailed guide which helped me purchase my first i-bonds recently but I am seeking to purchase more using the trust trick. Thank you!
Sincerely,
Henry
Harry Sit says
You need a signed and notarized trust document first. You don’t need to list the bonds’ serial numbers in the trust document. The bonds you buy in an online account don’t have serial numbers anyway.
Henry says
That makes sense that the trust document has to be created prior to purchasing the
i-bonds. How would we go about listing the newly purchased i-bonds under the schedule assets? Does the account# or amount need to be listed? Can you please show us an example? If detailed information is needed about the bond account then I assume the trust document is modified after the initial creation and will need it notarized again. Thanks again for your help!
Sincerely,
Henry
Harry Sit says
I put “TreasuryDirect Account ___________________” in my schedule. I filled in the account number after I opened the account. Someone else suggested putting $100 in an envelope as the seed asset for the trust and writing “$100” in the schedule. After opening the account, you then add “TreasuryDirect Account XXXXXX” as a new line in the schedule. Maintaining the schedule doesn’t require trust amendment or new notarization.
Lou says
On a joint trust where you have two trustees (spouses who are also the grantors), can you register the trust on TreasuryDirect with just the trustee who is also authorized to act on behalf of the trust (entity manager). In other words, do I have to include the names of both trustees in the registration name or title in TreasuryDirect?
Harry Sit says
TreasuryDirect gave this example when there are two trustees even though the trust account allows only one entity manager:
“John Doe or Sarah Jones, Trustees under Agreement with Jane Doe dated January 1, 2001”
I don’t know whether you can get away with listing only one trustee but I would follow their example and list both trustees.
michelle says
Thanks for the outstanding information!
Question Re IBond Registration for my Revocable Living Trust
Can I be confident that I will register my IBond Trust:
My name, Trustee, (my trust name) under agreement dated (date Trust created).
Thanks for the outstanding information:
I am the grantor and Trustee. (My husband is an initial Trustee and the successor and generally )
There is no mention of Declaration of Trust that I can find.
There is no mention of Trust Agreement in the Certificate of Trust.
However, there are a few mentions of “Trust Agreement” in the Trust, the first of which does not appear until Section 1.05 Grantor Trust Status”
“By reserving the broad rights and powers set forth in Section 1.04 of this Trust Agreement……”
Thanks for any assurance. Getting through to TD is hours these days.
Harry Sit says
It’s a Trust Agreement then. You need the grantor(s) in your registration as in “under agreement with [names of the grantors] dated [date].”
Lou says
Thank you for your reply (July 2at 9:32 AM). My problem is that I have two trustees (spouse and me) and were both authorized to act alone on behalf of the trust, however the trust name has the “and” in the title. I would like to use your example (John Doe or Sarah Doe) in the registration name, but I don’t want to snail mail them the trust documents. It would be technically correct to use the “or” between the trustee names in the registration since the trust authorizes it, so I don’t see why I shouldn’t do it. Also, the registration name doesn’t require I include the name of the trust in it. Do you think i can do this without going through the arduous process of sending them documents and awaiting a reply?
Harry Sit says
They want a Summary of Trust only for their records. The online account opening process won’t block you even if you include the name of the trust in the registration name. If you leave out the name of the trust, that’s OK too by their example.
Keith says
Hello Harry, I have a question regarding and/or. My wife and I have the connective “AND” between our names in our Trust Agreement. In the FS Publication 0049 it states that the connective “OR” may be used in the registration of the securities if the trust instrument permits each trustee to act independently. Then I see under “Learn More About Entity Accounts”, it states that if the connector “AND” is used, they will require a Certificate of Trust. Any thoughts? Would you change it to “OR”? I saw on your example you used “Person A or Person B, Trustees”. Thank you so much for providing this forum.
Harry Sit says
It’s quite common to have two grantors (“Person A and Person B Living Trust”) and two trustees who can act independently. It’s not a conflict when you have “OR” between the two trustees and “AND” between the two grantors. Those are two different roles. This is perfectly valid:
“Person A or Person B, Trustees under agreement with Person A and Person B dated xxxxxx”
TreasuryDirect wants a Certificate of Trust when you have “AND” between the trustees, not when you have “AND” between the grantors.
Keith says
Just to be clear. My Trust Agreement has the connective “AND” between the grantors. Can I change that to “OR” on the Treasury Direct registration? Thanks.
Harry Sit says
You don’t change it. You will still have “AND” between the grantors and you can have “OR” between the trustees at the same time if the trust allows either trustee to act independently. If you include the name of the trust in the registration, it can be like this:
“Person A or Person B, Trustees, Person A and Person B Living Trust under agreement with Person A and Person B dated xxxxxx”
Dunmovin says
Some of the “stuff” on the TD site use the words to the effect “for example,” meaning to most that that which follows is NOT the exclusive or only way. I recall a couple of years ago while in the process of setting up a colleague in a sole proprietorship, TD said “where is the dba filing,” and that colleague consistently stated that was not required by TD since it was merely stated to be an example. TD then came to conclusion (for it’s only rationale) b/c one was a “professional” the dba wasn’t required and so noted in their TD notes. She had initially only funded a small amount and then sent/wired by bank in the balance when TD got its act together. She has not heard anything on that issue and continues ibond purchases. Go figure
Keith says
Hello Harry. I have a clearer understanding. Our Trust Agreement is also like yours. My wife and I also have a joint trust and are both trustees and grantors. So, would I register like this? “Person A (myself) or Person B (my wife), Trustees, Person A (myself) and Person B (my wife) Living Trust under agreement with Person A (myself) and Person B (my wife) dated xxxxxx” . Thanks, again!
Harry Sit says
Including the name of the trust is optional. That works. If you run out of space, this also works:
“Person A (myself) or Person B (my wife), Trustees under agreement with Person A (myself) and Person B (my wife) dated xxxxxx”
Lou says
Harry, in your July 9th 7:44 AM response to Keith, you wouldn’t have to send the certificate of trust to the Treasury Dept? Are you sure about that?
Harry Sit says
TreasuryDirect said this about needing the Certificate of Trust:
“If the legal name of your trust, as shown in your trust document, shows more than one trustee and the names are joined by the connector “AND” (e.g., John Doe and Sarah Jones, Trustees under Agreement with Jane Doe dated January 1, 2001) you will be required to provide a Summary of Trust (also known as Certificate of Trust or Memorandum of Trust) or the appropriate pages of the trust showing that either named co-trustee may act independently.”
The name “Person A and Person B Living Trust” doesn’t say how many trustees it has. It only says Person A and Person B are grantors. It’s possible that you have Person C as the only trustee for this trust, which is another common setup — two parents having an adult child as the trustee of their joint trust. Including or not including the name of this trust in the registration doesn’t trigger the requirement to send the Certificate of Trust. Treasury wants the Certificate of Trust only when you have two or more trustees and the trustees are connected with “AND.”
In addition, having to send the Certificate of Trust isn’t a prerequisite to opening an account. It’s more like supplemental information for the records. If you’d like to send the Certificate of Trust anyway just in case, send it after you open the account. Meanwhile, you can do everything while it’s on the way or sits in the pile to be processed into the records.
ustaad says
Harry,
We already have two declaration of trust where each of us is both a grantor and a trustee. If we were to set up an additional trust where I am the grantor and my spouse is a trustee, whose SSN should be used? Must we use the SSN of the grantor always or can the SSN of the trustee be used? The same question applies to where there are multiple grantors and trustees. Is the SSN to be used must be that of either grantor? Is it necessary that the person whose SSN is used should appear first in the registration when listing grantors? There is also another point that I would like to get a clarification on. It is my understanding that one cannot just set up multiple trusts to buy more ibonds. Each trust must have a unique purpose. Is my understanding correct? Is it possible for TD to deny purchases if they find that the trust with a different nomenclature is not created with a unique purpose but just to circumvent the purchase limit?
Harry Sit says
A revocable trust uses the grantor’s SSN as its tax ID because the grantor is responsible for taxes. When there are two grantors, use one of the grantor’s SSN. It doesn’t matter which grantor is listed first. Pick one and stick with it. A trust can easily have a different purpose when the trust assets go to a different beneficiary (of in different percentages to the same set of beneficiaries) after the grantor’s death.
Ustaad says
Very much appreciate that clarification, Harry.
Kate says
Hello, Harry,
I have set up different trusts for different family member almost at the same time for I bonds. I am the trustee for all of these trusts. If after one year, the interest rate is not that good any more, so I myself want to cash out all of those trusts at almost the same time. Can I do that? How to cash out the I bonds for the trust? Do I need to fill out a form? Do I need to submit all the trust documents which have been notarized? Thank you. Looking forward to your reply.
Harry Sit says
Each trust account has a linked bank account. When you’d like to cash out the bonds, log in to each account and go to ManageDirect -> Redeem securities. It’s all online. You don’t need to fill out a form or submit trust documents when you cash out.
Roland says
Hi Harry,
what is the difference between these two trust registrations, ” John Doe AND Sarah Jones, Trustees under Agreement with John Doe AND Sarah Jones dated January 1, 2001″, and ” John Doe OR Sarah Jones, Trustees under Agreement with John Doe AND Sarah Jones dated January 1, 2001″? Why only the first trust with AND between two trustees need to mail in the certificate of trust? If John Doe dies, will Sarah Jones becomes the sole account manager/trustee automatically without sending in FS Form 5446?
Thanks.
Harry Sit says
When you have AND between the trustees, TreasuryDirect suspects that the two trustees must both consent before any action can be taken on behalf of the trust. They want documents to show that’s not the case. When you have OR between the trustees, they don’t suspect such and they don’t need documents. A trust account can have only one account manager at a time. Either way, the successor has to fill out a form to change the account manager after the account manager dies.
John says
Hi Harry,
I don’t quite understand the meaning of this paragraph: “In addition, if the joint trust has two trustees and the trust has the word ‘AND’ between the trustees, TreasuryDirect wants to be sure that the trust allows either trustee to act alone on behalf of the trust (versus requiring the consent of both trustees). They want documentation to demonstrate that’s the case. Please read the official instructions for what they need and where to send them.”
Does this mean that if your trust is named “John Doe and Sarah Jones Revocable Living Trust”, you have to send in extra paperwork? Or it just means if you use “And” in your Registration Entity Name when buying I-Bonds, you have to send in extra paperwork?
Thanks.
John
Harry Sit says
“John Doe and Sarah Jones Revocable Living Trust” only shows there are two grantors. It doesn’t say how many trustees this trust has. The requirement to send documents is only triggered by a specific setup of the trustees. See comments 115, 116, 118, and 119.
John says
Thank you Harry for the clear explancation!
Flingo says
Harry,
Just wanted to get your thoughts on any issues with the below:
1. My revocable trust for nephew 1 (use my TIN)
2. My revocable trust for niece 1 (use my TIN)
3. My revocable trust for niece 2 (use my TIN)
4. My spouse revocable trust for nephew 1 (use spouse TIN)
5. My spouse revocable trust for niece 1 (use spouse TIN)
6. My spouse revocable trust for niece 2 (use spouse TIN)
Do you see any issues with each trust being able to purchase $10,000/year in i-bonds? If you do not see any issues, do you see any issues with any/all of the trusts redeeming any/all of the i-bonds sometime in the next one to two years?
FYI, Treasury is longer responding to email queries per an email I received from Treasury the end of July.
Thanks for all the great info on the website,
Harry Sit says
I don’t see any issues when you have a separate trust document for each trust. See comment 122 on cashing out.
John says
Thank you Harry for the clear explanation!
Ted says
Hi Harry!
I’m a still a bit confused about Declaration of Trust vs Trust Agreement, and whether the Successor Trustee needs to be named.
My trust title is “The [Person A] Revocable Living Trust Agreement Dated [date]”
And the first paragraph says…
This trust agreement is made on [date] between [Person A], (“Settlor”) and [Person A] (“Trustee”), [Person B] (“Successor Trustee”). The Trust created hereby shall be titled the [Person A] Revocable Living Trust.
There’s no “and” or “or” in the trustees… and initially the trustee is really just me…
I thought of a few options, but at this point all of them could be wrong!
Opt 1. I’m overthinking it; it’s just a Declaration of Trust with an easy entity name…
[Person A], Trustee U/D/T dated [date]
Opt 1b. Like option 1 but add the trust title since there’s room…
[Person A], Trustee, [trust title] U/D/T dated [date]
Opt 2. Agreement style but leaving out the specific successor…
[Person A], Trustee, [trust title] U/TR/A with [Person A] dated [date]
Opt 3. Trying to include the successor; removing title because it won’t fit…
[Person A], Trustee, [Person B], Successor Trustee U/TR/A with [Person A] dated [date]
What do you think?
Thanks,
Ted
Harry Sit says
Option 2. The successor trustee has no power until you die.
Terry says
Harry,
After reading all these comments, I want to see if you agree with my understanding of things. My wife and I have individual accounts. I have a trust with me as trustee and we have a joint trust with me and my wife as joint trustees with the “and” connector. I understand I can purchase $10,000 worth of I-bonds in each account for a total of $40,000 each year using my ss# on both trust accounts and the same bank account for all 4 accounts. Then after a few years we could transfer $30,000 from our individual accounts into either trust account as long as I do not purchase new I-bonds into the account it goes into. In other words there is no limit on transfers and I can keep the individual accounts low and build up the trust accounts which would help me to avoid probate in my state. Do I understand all this correctly?
wallies says
Hi Harry,
My trust account was opened on 7/1/22 in the amount of $10,000. Since then, the account doesn’t show any interest. My personal account accrues interest every month and shows the new total. This is a huge problem. Do you know why my trust account is not showing any interest?
Thanks,
Sandra
Steven H says
https://thefinancebuff.com/how-to-buy-i-bonds.html#htoc-three-month-lag
“If your bonds are still within five years from the Issue Date, the Current Value automatically excludes interest earned in the last three months. If you cash out today, you’ll receive the Current Value. That’s why you won’t see any interest in the current value during the first four months. You will start seeing a higher value in the fifth month.”
Mark N. says
Harry: Thanks for the information you provide. After reviewing all the Qs and As above, I have a a couple a question or two.
1. I want to simply buy $20k of I bonds for my wife and me (one each) in each of the next several years. I want them to be part of our joint living trust. From what is indicated above, we cannot simply open a TD account in the name of the trust and buy two $10k bonds per year (one for each of the two grantors)? Rather we have to have a combination of at least two TD accounts, and accumulate at least half of the bonds outside of the trust in an account in the name of one of us individually. Then, when we are done investing, we wait a year and transfer the accumulated bonds to the trust’s TD account. Correct?
But from what you are saying the transfer of the accumulated bonds always count against the purchase limit. Because the transfer would be multiples of the limit, wouldn’t that violate the TD purchase rules and make the account subject to closure and perhaps the loss of accrued interest?
This seems pretty critical. What is the source of the information on the transfer to a trust being counted against the purchase limit? And what is the source of the information that TD allows bulk transfers exceeding $10k to a trust in a year where it had no purchases?
Thanks again.
Harry Sit says
The federal regulations that govern savings bonds in TreasuryDirect are in 31 CFR Part 363. You can search for the word “transfer” there. 363.52(b) says “Bonds purchased or transferred as gifts will be included in the computation of this limit for the account of the recipient for the year in which the bonds are delivered to the recipient.” 363.55 gives a minimum amount for a transfer but not a maximum amount.
https://www.ecfr.gov/current/title-31/subtitle-B/chapter-II/subchapter-A/part-363
Ron Shiffler says
Is it possible to buy I bonds in an irrevocable unitrust? I saw this mentioned in #16, but I also read the discussions where the beneficiary must be an individual. Our unitrust beneficiary is a 501(c)(3) organization, so I think the answer is “no.” Is it still possible? Thank you.
Harry Sit says
Yes, it’s possible. The beneficiary for bonds in a personal account at TreasuryDirect must be an individual. Bonds in a trust account at TreasuryDirect can’t have a beneficiary because the trust doesn’t die. It doesn’t matter who the trust’s beneficiaries are.
Tom Smith says
Harry, you may want to reconsider this position. The limits are per SSN/EIN. If you have accounts in your individual name and your revocable Trust both in your SSN you may be in violation of the limits. TreasuryDirect states, “Note: The three purchase limits above apply separately. That is, in a single calendar year you could buy $10,000 in electronic Series EE bonds, $10,000 in electronic Series I bonds, and $5,000 in paper Series I bonds. The limits are applied per Social Security Number”
Harry Sit says
The part you quoted from the website doesn’t give you context. It’s accurate for personal accounts but it’s not true for both personal and trust accounts.
Lester E Lloyd says
Thank you for your informative site!
Concerning transferring I Bonds from a personal account to a trust account: You note one should not buy the maximum in both accounts and then consolidate by transferring one to the other in the same year. You also note that a transfer into the destination account counts as a purchase in the destination account. Does it then follow that one may add the maximum to the personal account and then transfer all the personal assets to the trust account in the same year, without adding any other funds to the trust account, and that thus one will not get a stern warning from the Treasury?
Harry Sit says
I’m not clear on what you’re thinking of doing exactly. If you’re not buying the maximum in both accounts and you eventually want all the bonds in the trust account, it’s simpler to buy in the trust account directly. If you max out both accounts, you keep them separate until you’re done buying all the bonds you want. Then you transfer in the following year.
Lester E Lloyd says
Thank you for your prompt reply. I apologize for not being clear. I do wish to maximize my purchase in 2023 and also transfer my current I Bonds in my personal account to my trust account in 2023. Thus, I am wondering if I purchase $10,000 I Bond only in my personal account in 2023 and then transfer all of my personal account to my trust account in 2023 if I am likely to get the Treasury stern warning. I suspect it sounds like I am splitting hairs, but if allowable I will be able to add $10,000 to my holdings in 2023 while still meeting my goal of consolidating my holdings into my Trust account in 2023.
Harry Sit says
That works. Or you can buy in both accounts in 2023 and transfer in 2024. That delays your transfer by one year but it gives you an extra $10k at the 2023 rates assuming you’re happy with the rates.
Pam says
I am going to transfer the full amount in my personal TD account to my revokable living trust TD account. Is it best to use form 5511 or form 1851 to do so?
In the year I do this, does the transfer of money to the revokable living trust affect my ability to purchase $10,000 in new a new I-Bond that year?
Thanks, so much for your comments on this topic!
Harry Sit says
Try the online process first, under ManageDirect -> Transfer securities. It will tell you to use Form 5511 if it doesn’t let you complete it online. A transfer counts toward the limit of the receiving account. So don’t buy any in the trust account in the same year after you do the transfer.
Terry says
Has anyone transferred more than $10,000 from one TD account to another without any problems?
Dunmovin says
Terry, go read the various threads, as I recall one transferred $10k + to one account in one year with no consequences. Of course, the ultimate is to gift multiple $10k to a terminally ill person with you or… as the bennie and upon death it all goes to you/Bennie in one year!
Sunflower says
Disgusting thought. Hope you never have a terminally ill person in your life where you take advantage of the situation.
Peter says
We all start to die when we are born! If the rules are set up a particular way, some call that death bed planning and a way to devise part of an estate
Justin B. says
I want to pass along an error message that I received when opening a new account for a Trust, and the fix I needed. When I entered the Registration Name I followed the advice here. I kept getting an error that (I can’t recall the exact wording) “You have used a character that is not allowed. Do not copy and paste.” I resolved the error by deleting all the commas in the Registration Name. I hope this helps someone else.
Harry Sit says
Thank you, Justin. I added a note in the Registration Name section.
Reggie says
I found out the same thing after hours on hold for TD since they no longer answer emails. No punctuation all in the registration name even though the examples have them. For example, just: John Doe or Jane Roe Trustees under Declaration of Trust dated October 12 2022. I would not use slashes or abbreviations either.
Dunmovin says
My Trust account Registration has several commas and, as noted, the TD examples have punctuation. This is the result when there is not notice/comment on proposed regulatory/change, e.g. now there are registrations with and also punctuation, etc. Rumor has it the public also know something and is glad to provide input when given the opportunity….What else lurks out there? All the nonconforming instructions, videos, etc.
Nancy A. says
I went ahead and got a trust iBond in my family’s trust name, not realizing the rules for registration. My father and I are co-trustees on our revocable trust, meaning we CANNOT act alone. (My father is the grantor, but I’m not.) I could have our estate lawyer add a delegation to our trust that I can act alone for a year, and send that in to TD with the trust document. But then I’d have to pay the lawyer to do that. Could I instead send TD a notarized statement that we both authorize the purchase of the iBond when I mail in our trust doc?
Dunmovin says
And the verdict is? Can one set up a TD trust account exactly as the trust is set up, i.e. with commas, etc.? And if not, doesn’t that constitute 2 trusts…one with commas, etc. (the legal one) and the other (nonconforming) one? And on the latter…anyone practicing law today?
Harry Sit says
TreasuryDirect fixed the bug. Commas and other punctuation characters are accepted now.
William Baer says
All of my assets are in a revocable trust. My treasury account is set up as a revocable trust as well. My attorney advised me not to put any assets other than retirement accounts into an account set up under my name only as this would create probate issues at my death. So….it would appear that I can only purchase $10000 of I Bonds per year (other than purchasing as a Gift). In this case setting up 2 accounts appears not to work. Is this correct?
Harry Sit says
That’s a question for your attorney. A personal account holding bonds with a designated beneficiary doesn’t go to probate or your estate, but the designated beneficiary can only be one individual person, not a trust. Maybe your attorney is OK with it, maybe not.
Olson says
Do you “really” want someone to second guess your attorney? Look at TD form 5336
MH Sugiyama says
Who pays taxes when the TD bond or t-bills matures? Does the grantor receive the 1099-INT and pay the federal taxes for that year?
Harry Sit says
TreasuryDirect will issue a 1099 form against the Tax ID you gave for the account when you first opened the account. If it’s a grantor trust and you gave the grantor’s SSN as the trust’s Tax ID, the grantor will pay the tax. If it isn’t a grantor trust and you gave a separate EIN for the trust, the trust will pay the tax.
James Frank says
I want to add a beneficiary to my bonds. The ManageDirect >> Registration List -Add page shows inputs for both a “First-Named Registrant” and “Second-Named Registrant (Required for Primary Owner and Beneficiary registrations only.)”. Selecting the Beneficiary radio button requires filling out both Registrant inputs. I just want to register one beneficiary, not two??
Harry Sit says
The first-named registrant is you the owner. The second-named registrant is the beneficiary when you select the Beneficiary radio button.
Kristen says
Is is possible to create TWO Treasury Direct accounts for our Trust?
Using one grantor’s SSN for the first and the other grantor’s SSN for the other?
We want to transfer our individual I-Bonds to the 2 separate TD Trust accounts so we avoid the $10,000 transfer/buy limit for the year.
Thank you.
Harry Sit says
The same entity can’t have two different Tax IDs at the same time.
Kristen says
P.S. This suggestion was a suggested workaround for possibly not being able to transfer $10,000 from 2 individual TD accounts into a new TD Trust account in the same year. I had understood that there is a transfer limit the same as the yearly buy limit. Can you transfer $20,000 to a Trust account in the same year? No purchases made from Trust account.
Thanks again.
Harry Sit says
Imagine two individuals who have been buying I Bonds for many years. Now they created a trust and they’d like to transfer their existing bonds to their trust account. They should be able to transfer all of them. Just don’t buy new bonds in the trust account in the year it receives the transfer.
Kristen says
Thank you so much for your replies. Just to let you know, I called Treasury Direct this morning to ask if there was a limit on amount transferred to a new Trust account. Unfortunately the $10,000 purchase limit also applies to transfers. I specifically asked if a couple had, for example, $100,000 in their individual accounts, how would they transfer to a Trust account. The answer was you could only transfer $10,000 every calendar year. I’ve concluded that one could probably get away with a transfer in excess of $10,000 once, resulting in the infamous warning email, but further transfers that exceed the yearly limit could cause major problems.
Ravin says
Hi Harry,
In Dec 2021, per your post above and excellent details in the book, I setup a second trust myself with my wife’s name as first name and me as second name on the trust. Our original trust has me as first name and my wife’s name as second name. Thus, I was able to max out $10K individually for each of us and $10K in each family revocable trust account – so total of $40K for 2021 and 2022 each.
I wanted to check with you if there were any challenges you/anyone else faced if you redeemed I-Bonds in the second trust account after 1 year? I’m considering to redeem $20K in I-Bonds I have in the second trust account and deploy those in the optimal TBills ladder.
Thanks
Ravin
Harry Sit says
I haven’t redeemed my I Bonds in the second trust yet. I’m waiting for them to pass the mark of three months after 9.62% or three months after 6.48%. There’s a table in When to Stop Buying I Bonds or Cash Out and Buy TIPS. I don’t expect any challenges. The proceeds should go straight to the linked bank account.
Steven H says
I have I Bonds in a personal account and multiple revocable trust accounts of which I am the grantor, all of which use my Social Security number as the tax ID.
For the first time, in the 2022 tax year I have reportable I Bond interest, and it is from each of these acccounts.
Should I report the interest on IRS Schedule B as one aggregated figure for all accounts, or list it separately for each account?
I am doing annual interest reporting, but the question would also arise if I were not, but had redemptions in multiple accounts.
Thanks.
Harry Sit says
If you redeem, TreasuryDirect will issue a separate 1099 form for each account. You will report them on separate lines on Schedule B. You should follow the same pattern when you report interest annually on your own.
Steven H says
Thanks.
In TurboTax, it looks like I need to enter the interest as a 1099-INT, into only Box 3. Is this how it appears on Treasury Direct 1099-INT forms for savings bond redemptions?
Lou Petrovsky says
Yes. Per the IRS instructions, do not also include it in Box 1. Using Box 3 only ensures that your federal Form 1040, Schedule B will include it in income. If you also file a state return, entering in Box 3 will also ensure that the TurboTax software will show the interest as tax free on your state return.
The fact that you received the interest as part of your redemption proceeds has no tax effect unless you used some or all of your redemption proceeds to pay for qualifying tuition expenses, in which case you will need to look for the box where you enter the interest amount that is federally exempt (you may want research 2022 Form 8815 and instructions before entering anything in that box). The exempt amount should show on your federal Schedule B, line 3, and that will be subtracted from the total interest income shown on line 1 of that Schedule.
Mandy D says
Hi Harry,
How can I simply Redeem the full amount from my Trust accounts online? I don’t see that option!
Or is the only way to Transfer to my personal acct in the year I don’t buy? Will that require a Form? I live mostly in Italy now so that might be a nuisance!
Harry Sit says
ManageDirect -> Redeem Securities -> Series I -> pick the bond(s) to redeem.
If the bonds are less than five years old, you may want to wait until at least August 1 to minimize the early withdrawal penalty. See this table for the best time to redeem by which month your bonds were issued:
https://thefinancebuff.com/when-to-sell-i-bonds.html#htoc-when-to-cash-out-0-i-bonds