Redeeming a U.S. savings bond that lists a minor as the owner or beneficiary is a challenging process. An adult can redeem the bond only under certain conditions. Whether the bond is redeemed by an adult or by the minor, proper identification and documents are essential.
Strict Limits
Treasury Direct, the Treasury Department website for buying and selling U.S. government bonds, specifies an adult may redeem a savings bond for a "small child" under three conditions.
- The adult is the parent of the child.
- The child is too young to sign the request for redemption.
- The child lives with the parent, or the parent has legal custody of the minor.
Treasury Direct also provides a statement that the parent must copy and sign on the back of the bond, giving the minor's age and stating the minor is not able to understand the transaction. You'll need to show the child's birth certificate, as well as proof of legal custody or that the child resides with you.
Uncertainties
Treasury Direct does not define "small child" or specify how young is too young to understand the transaction. Adding to the uncertainty, the financial institution handling the transaction -- such as a bank or credit union -- has the option to refuse to redeem the savings bond.
Redemption by Minor
Treasury Direct's instructions to financial institutions state that if the child is not too young to understand the transaction, the child should sign the request and the institution should ensure the child has proper identification.
Any one of three types of identification are accepted for adults and minors, according to Treasury Direct.
- Identification as an established customer of the financial institution handling the transaction. The customer must have had an account for at least six months.
- Identification by another person. This individual must have had an account at the financial institution for at least six months, or be known to an officer at the financial institution.
- Identification by document. A driver's license or a state ID card are acceptable. Any acceptable ID card must have the requestor's photo, physical description and signature. Documents can be used for identification only if the bond or bonds are valued at $1,000 or less.
Minors as Beneficiaries
Treasury Direct does not list any specific requirements for a minor listed as a Payable On Death beneficiary. A death certificate must be supplied for the original owner. A beneficiary who survives the original owner becomes the new owner. Redeeming the bond for a minor as a beneficiary follows the same procedure as a bond originally owned by a minor.
Federal Reserve Sites
If the financial institution declines to handle the transaction, you will need to turn to the Federal Reserve A financial institution still must certify the signature on the bond. Then the parent or child sends it to the Treasury Retail Securities Site, which is the Federal Reserve Bank of Minneapolis, or to the Pittsburgh branch of the Federal Reserve Bank.