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Home > Planned Giving > Gifts of Savings Bonds > Getting Started: Savings Bonds

Getting Started: Savings Bonds

As the stock market has fluctuated, bonds have grown popular because of their security and steady return. Redeeming bonds can complicate your tax situation, however, so giving them as a charitable gift in your will may be a smart way to support a cause you believe in and relieve some of the tax burden on your estate.

If you own bonds, you probably do not declare the interest income as the value of the bond increases. The difference between a bond's purchase price and its value when redeemed is usually taxed when the bond is sold.

Unfortunately, bonds cannot be donated to a charitable organization during your lifetime. Instead, you can redeem the bonds and make a gift of cash. The redemption still triggers tax liability to you on the interest income. If you die owning savings bonds, the untaxed interest may be subject to a combination of estate and income taxes that could absorb as much as 65 percent of the untaxed interest.

Leaving the bonds to Sisters Hospital Foundation through your will, however, will allow your estate to donate the full value of the bonds—qualifying your estate for relief from estate and income taxes. Another option is leaving the bonds, upon your death, to a charitable remainder trust to first benefit your loved ones with payments for their lifetimes and then the balance to The Foundation.

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Please call Julie Snyder at 716-862-1992, or e-mail us at jsnyder@chsbuffalo.org, for more information.

Copyright © The Stelter Company, All rights reserved.

The information in this Web site is not intended as legal advice. For legal advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income tax include federal taxes only. Individual state taxes and/or state law may impact your results.