Generally an estate gift of Series E, EE, H or HH federal government issued bonds.
Series E, EE, H and HH bonds, issued by the federal government, accrue interest income annually. You may declare that interest each year in gross income, or you may defer reporting the interest until you dispose of the bonds. The interest income on savings bonds is considered IRD income (income in respect to a decedent), so an heir must also declare the total appreciated value as income when the bonds are cashed.
You cannot give savings bonds to Clarkson during your lifetime without first recognizing the accrued interest income, so in most cases an outright gift of savings bonds is not recommended. However, because heirs must also pay tax on the accrued interest, it may be wise to create a specific bequest in your will or living trust gifting savings bonds to Clarkson and other assets to heirs. As a charity, Clarkson pays no income tax when the bonds are cashed.
Another alternative to explore with your estate planner is gifting the bonds through your estate to a testamentary charitable remainder trust, which would pay income to an heir(s) before the remainder eventually goes to Clarkson.
Tax and Financial Implications
Generally, a gift of savings bonds provides no income tax benefit to the donor during life, unless the donor recognizes the accrued interest and donates the cash proceeds from the bonds, but this is rarely recommended.
Specifically gifting savings bonds to Clarkson at death and other assets to heirs may save the recognition of interest income to heirs, and may reduce estate tax if the value of your estate is subject to tax.
Please contact the Annie Clarkson Society for further information.
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This web page does not provide legal or financial advice, nor is it a comprehensive review of the topic. You should consult your legal and financial advisors and Clarkson University before making or planning your gift.