Short answer: It depends on how the bonds were registered. Bonds with a surviving co-owner or a POD (“payable on death”) beneficiary pass directly to that person, outside probate entirely (31 CFR §353.70 for Series EE/HH paper bonds; §360.70 for Series I). Bonds in the decedent’s name alone can usually skip court too: if the decedent’s total Treasury securities were worth $100,000 or less at death, one family member can collect everything with FS Form 5336 — no probate, no lawyer required. Above $100,000 with no named survivor, the bonds go through estate administration. And one piece of pure good news: California can’t tax a penny of the interest (31 USC §3124).
Figures verified against 31 CFR Parts 353 and 360, FS Form 5336, IRC §454 and §691, and 31 USC §3124, 2026. This is general information, not legal advice for your situation.
Step one: read the registration, not the will
Savings bonds are contract property — the registration on the bond (or in the TreasuryDirect account) controls who gets them, and the will only matters if the registration runs out of names. Three possibilities:
- Co-owner (“OR” registration). “John Smith OR Mary Smith” — Mary becomes the sole and absolute owner the moment John dies (31 CFR §353.70; §360.70 for Series I). She can cash or reissue with a death certificate. No probate; the will can’t redirect it.
- POD beneficiary. “John Smith POD Sarah Smith” — same result for Sarah at John’s death.
- Sole owner, no survivor. The bonds belong to John’s estate, and the question becomes whether you need a court or just a form.
For electronic bonds, write to Treasury Retail Securities Services for a holdings report — many people hold both paper bonds in a drawer and electronic bonds online, and you need the full total before choosing a path.
The $100,000 no-probate shortcut: FS Form 5336
Treasury runs its own small-estate procedure, separate from California’s. If the decedent’s Treasury securities — all of them combined — totaled $100,000 or less in redemption value at death, and no probate is open or planned, one person can file FS Form 5336 (“Disposition of Treasury Securities Belonging to a Decedent’s Estate Being Settled Without Administration”) to collect the whole holding.
Two traps hide in the fine print:
- Not just anyone can sign. The “voluntary representative” must be the surviving spouse, a blood relative, or a legally adopted child. An unadopted stepchild, a son-in-law, or the family friend named executor in the will can’t act — a common dead end for blended families.
- The $100,000 cap is Treasury-wide. It counts every Treasury security the decedent held, paper and electronic together. Over the line, Treasury requires court administration before it will pay.
Note how this interlocks with California law: the state’s own small-estate affidavit covers estates up to $208,850, but Treasury securities have their own federal rulebook — you use Treasury’s form for the bonds and California’s procedures for everything else. Different forms, different thresholds, same funeral.
What AI tools get wrong here
Chatbots regularly tell people to take savings bonds “to the bank” or to use California’s §13100 affidavit on them — both stale. Most banks stopped redeeming inherited paper bonds years ago, and Treasury follows its own regulations, not state affidavit forms. AI also still describes buying paper bonds with your tax refund; that program ended January 1, 2025, and paper savings bonds can no longer be purchased at all — everything new is electronic through TreasuryDirect.
The interest: one federal tax decision worth making on purpose
Series EE and I bonds accrue interest for decades, and most owners defer the tax until redemption. At death, all that untaxed interest has to land somewhere. The family gets a choice:
- Default: it’s income in respect of a decedent. Whoever redeems the bonds pays income tax on the accrued interest when they cash them (IRC §691(a)), with a deduction if federal estate tax was attributable to it (§691(c)) — rare, given the $15 million exemption.
- Election: put it all on the final 1040. The executor can elect under IRC §454(a) to report all interest accrued through death on the decedent’s final tax return. When the decedent died early in the year or with low final-year income, that return may sit in a much lower bracket than the heirs’ — real savings. It’s an all-or-nothing, run-the-numbers decision: have a CPA compare both ways before anyone redeems anything. That math is a tax preparer’s job, not a lawyer’s.
And the California side is simple for once: interest on U.S. savings bonds is exempt from state taxation (31 USC §3124(a)). Whatever the federal outcome, California collects nothing — subtract it on the state return.
Old bonds: stop letting them sit
Every Series HH bond stopped earning interest in August 2024 — final maturity for the last ones issued (August 2004). If the drawer holds HH bonds, they’re earning nothing; cash them. Same for any EE or I bond past its 30-year maturity. Inherited bond piles routinely mix live bonds with dead ones — sorting by maturity date is the first hour of real work, much as transferring stocks after a death starts with finding out what’s actually there.
How do I cash savings bonds that belonged to someone who died?
Check the registration first. A surviving co-owner or POD beneficiary sends Treasury the bonds with a certified death certificate (and the applicable form) to redeem or reissue — no probate. If the bonds were in the decedent’s name alone, use FS Form 5336 when total Treasury holdings were $100,000 or less; above that, the estate’s court-appointed representative claims them.
Do savings bonds go through probate in California?
Only when there’s no surviving co-owner or POD beneficiary and the decedent’s total Treasury securities exceed $100,000. Registered survivors take outside probate under 31 CFR §§353.70 and 360.70, and smaller holdings pass by Treasury’s own FS Form 5336 procedure without court involvement.
Who can use FS Form 5336?
A voluntary representative who is the decedent’s surviving spouse, a blood relative, or a legally adopted child — and only when total Treasury securities were $100,000 or less at death and no estate administration is underway or planned. Non-relatives, including a named executor who isn’t kin, don’t qualify for this shortcut.
Is interest on inherited savings bonds taxable?
Federally, yes — the accrued interest is taxed either to whoever redeems the bonds (as income in respect of a decedent under IRC §691) or, by election under IRC §454(a), all on the decedent’s final return. California taxes none of it: savings-bond interest is exempt from state tax under 31 USC §3124.
How do I get into a TreasuryDirect account after the owner dies?
You don’t log in as them — you write to Treasury Retail Securities Services with a certified death certificate and the appropriate form, and Treasury transfers or redeems the electronic securities to the entitled survivor, voluntary representative, or estate. Start with a holdings report so you know the date-of-death total.
Are Series HH bonds still worth anything?
They’re worth their face value plus any final unpaid interest — but they stopped growing. All HH bonds reached final maturity by August 2024 and no longer earn anything. Cash them; there is no reason to hold a matured bond, and the deferred interest built into them becomes taxable at redemption anyway.
The bottom line
Savings bonds are one of the friendlier assets to inherit: registrations beat probate, Treasury’s $100,000 form beats court for modest holdings, and California can’t touch the interest. The real decisions are the FS Form 5336 eligibility check and one federal tax election that belongs on a CPA’s desk. If the bonds are part of a larger estate you’re settling — or the voluntary-representative rules just disqualified everyone in your family — Talk to Eric and he’ll help you sort which pile goes to Treasury, which goes through California’s procedures, and which questions go to your tax preparer.
Sources: 31 CFR §353.70 (Series EE/HH: survivor/beneficiary is sole and absolute owner); 31 CFR §360.70 (Series I); FS Form 5336 ($100,000 redemption-value limit at death; voluntary representative = surviving spouse, blood relative, or legally adopted child); IRC §454(a) (final-1040 interest election); IRC §691(a), (c) (income in respect of a decedent); IRS Pubs. 550, 559; 31 USC §3124(a) (state-tax exemption); paper-bond purchases ended 1/1/2025; Series HH (last issued 8/31/2004) ceased earning interest August 2024.
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