July 21, 2022
Listen to Podcast Episode:
Since this episode comes out on KT’s birthday, Suze prepared a special set of questions all about gifting Series I bonds.
Music: Music In
KT: Good morning Suze.
Suze: Guess what today is?
KT: It's my birthday.
Suze: It's your birthday.
KT: It's my birthday. It's my birthday
Suze: July 21, 2022. Alright everybody, welcome to a very special Ask
Suze: KT and Suze Anything surprise podcast special for KT's Birthday.
Music: (Music Plays)
Suze: Remember that song?
KT: I remember when you played it for me for the first time I cried like a baby.
Suze: That was composed and created by our very good friend Woody Simmons
Suze: who was actually with us
Suze: that night in Florida
Suze: for my 50th birthday on the beach. Watching turtles come in when nobody else really knew that KT and I were madly in love.
KT: Madly in Love... it was a secret.
Suze: And that song is from Woody Simmons. I'll post the entire song
Suze: on the Women & Money app
Suze: so you can hear it.
Suze: But it was a beautiful song that was presented to KT on her very first birthday that she shared with me
Suze: 21 years ago today. How does that make you feel?
KT: It makes me want to cry again. You can cry. It does, it makes me want to cry again because sometimes you want to cry because it's gone so fast so fast. Too fast.
Suze: Now I have another surprise by the way
Suze: for those of you who also want to hear other things that woody has written, you can go to woodysimmons.com
Suze: W-O-O-D-Y-S-I-M-M-O-N-S dot com.
Suze: One of my oldest, oldest friends in the world who worked with me at the buttercup bakery. They go way back to 1973, an extraordinary musician, an extraordinary friend and her wife, Paula Cannon, an extraordinary lawyer.
Suze: We're so lucky to have them in our lives.
Suze: So KT,
Suze: I have a little birthday surprise for you today.
Suze: You have in front of you
Suze: all these questions that you have picked out for today's podcast. Right?
KT: Yeah. We went through, I have like too many. I keep telling you.
Suze: And guess what? We're not going to do any of them.
KT: You're kidding. Oh No I’ve been studying these!
Suze: Because I have a birthday quizzie for you. Yes I do. I have 30 questions.
KT: Is this what we're doing today? Sorry, everybody that you're going, you're going to miss all her great financial advice because my birthday.
Suze: No, this this topic is Series I bonds again.
KT: Is this is a quizzie about money and me?
Suze: No, I just wait, just wait, just listen.
Suze: Happy birthday. Happy birthday. Okay, 30 quizzie questions. What do you think I was going to give you 70 and I thought, oh my God shall die right in front of me will never make it to this trip. Anyway. Ever since I introduced the topic of gifting Series, I bonds
Suze: putting them in a gift box and delivering them later. You have all gone berserk on me. You are writing thousands of emails asking, can you do this? Can you do that? Can you do that? Can you do this? So I thought, okay,
Suze: we'll ask KT and see if she knows. And these are 30 questions that all of you need to know the answer to. For those of you who don't know about Series, I bonds
KT: That's not nice. That's not nice.
Suze: I just slapped them down.
KT: No, that's not nice. No slap downs on my birthday.
Suze: Oh, sorry about that. Take that back. But again, on April 17th is an entire master class on Series I bonds. Again on May 12th
Suze: there was an entire quizzie again
Suze: on Series I bonds, and now this entire quizze is about gifting I bonds.
KT: let's do a lot of Ding, Ding, Ding.
Suze: Right. And for those of you who don't know what that means very simply.
Suze: Obviously individuals can only gift I bonds to other people.
Suze: And the maximum that you can gift is $10,000 a year or so you may think. So I want you to listen to this carefully.
Suze: All right,
Suze: Are you ready to start today's quizzie that's really all about gifting Series I bonds? The first few questions maybe about the first 10 are about how you title bonds period. Because so many of you are still confused about
Suze: what happens if you take it in your own name
Suze: with a primary beneficiary with a secondary owner. So let's see if KT can answer these. KT, these are very quick. Yes or no answers rapid fire. If I buy an I bond in just my name with no joint owner or beneficiary
Suze: and I die, will the bond have to go through probate? (KT says: "Absolutely.")
Suze: Ding Ding Ding Ding Ding Ding. Alright. If I buy an I bond and name a beneficiary and I die, will the beneficiary get the I bond without probate?
Suze: (KT Says "yes") Ding Ding Ding Ding Ding. Oh you're getting a birthday celebration here. Right. 00:07:37
Suze: Can the beneficiary view the amount
Suze: of my I bond that their beneficiary of? Yes or no.
KT: Why not, sure.
Suze: Right, you little rascal. Alright, Ding Ding Ding Ding. Can the beneficiary sell my I bond? Yes or no. 00:07:58
Suze: (KT Says "no") Ding Ding Ding Ding. If I add a secondary owner rather than a beneficiary and I die, can they get my I bond without probate?
KT: Yes, I believe they can. 00:08:10
Suze: Ding Ding Ding Ding. Oh you are five for five. Come on, let's get 30 for 30.
Suze: Are we taking bets on her? Are we taking bets on her?
KT: Don't ever bet on me everybody.
Suze: Oh I always bet on her, I bet on her a long time ago and I won the jackpot.
Suze: If I add a secondary owner, can they view the I bond, yes or no.
KT: Yeah. I think they why not? Of course they can.
Suze: Ding Ding Ding Ding. If I add a secondary owner, can they buy or sell my I bond?
Suze: Ehhhhh. They most certainly can. That is the difference everybody between a primary beneficiary and a secondary owner. Both can view the I bonds that are in your name, only the secondary owner can sell it and have access to it.
Suze: When you buy an I bond as a gift. Now we're going to gifts.
KT: I like that now we’re going to gifts.
Suze: That's why I did this. Do you get it?
KT: I get it.
Suze: So smart, so smart. When you buy an I bond as a gift, does the person you bought the gift for 00:09:22
Suze: to know that you bought it for them? Yes or no (KT says "I don’t think so, no.")
Suze: Correct. Ding Ding Ding. However you must have the person's name and social security number. 00:09:35
Suze: Can a trust or business account buy a gift
Suze: of a series I bond for someone, yes or no.
KT: I'm not sure but
KT: I don't think so. I think just a person can buy as many as they want for people.
Suze: Ding Ding Ding Ding Ding Ding, correct. You can only buy a gift of an I bond
Suze: if you are doing it in your personal I bond account.
Suze: Where do the I bonds you buy for someone go?
KT: In your box.
Suze: What's that box called?
Suze: (KT says: "Your Gift Box") Ding Ding Ding. You are doing so good. You are like one out of 10. You're good. Alright. So again just so you're all clear, you've purchased the maximum of an I bond for this year
Suze: and you've done that for yourself.
Suze: You have the ability
Suze: to buy up to $10,000
Suze: for as many people as you want and put them in as many individual gift boxes as you want. 00:10:42
Suze: Got that? You can even give,
KT: Can you give me like 70 gift boxes this year?
Suze: Yes, that would be a lot of money. So be very careful everybody and realize
Suze: that KT can buy for me $10,000 of a Series I Bonds and put it in her gift box. She can buy another $10,000 for me and put it in another one of her gift boxes. If she wants to gift me $50,000,
Suze: in $10,000 increments in gift boxes, she can do that and I can do that for her. There's no limit? No limit. The key is, and KT, you can give $10,000
Suze: in a gift box to as many people as you want.
Suze: Okay. The only thing you have to keep in mind is since you already bought $10,000 of an I bond in your personal account and so did I, I can't deliver that gift to you.
Suze: Because it's disqualified because you already have $10,000 in your name.
KT: When can you deliver it?
Suze: In the year that you don't buy $10,000 for yourself. But in the meantime, it can sit in your gift box or my gift box
Suze: earning these really high interest rates. So you don't have to wait till next year. See what happens with inflation. You can take advantage of it right now.
KT: Can I ask you a question? Can you buy too many gift boxes for me? Because I can only get one a year.
Suze: That's right. So you can only deliver, let's say you put $10,000, KT or I put $10,000 in a gift box for you,
Suze: and I want to deliver that to you, I can only deliver one a year. It's not even if you're too old. Remember everyone when you buy a series I bond and put it in a gift box, that money is just sitting there
Suze: and until you deliver it, it cannot do anything other than earn interest. And we do not know how long inflation is going to last.
Suze: Maybe it will last two years, three years, four years, five years. But KT, there were many years when I bonds were paying 0% interest. So when I say you can buy a lot or you hear me say, KT, we've purchased a lot,
Suze: I’m talking about five gift boxes each. That's it. Right? But you don’t want to buy more than that because
Suze: it's going to take us five years to deliver each one of those gift boxes when we want to deliver them. So be reasonable everybody, don't go crazy on this.
Suze: Got that? Does that makes sense to you?
KT: Yeah, that makes perfect sense.
Suze: How do you like the present I gave you this morning that I made for you?
KT: I can't wait to pop the cork and enjoy it with you. Maybe not today, but in the near future. I'd like to save that and also enjoy it with my sister.
Suze: Yeah. It was a great thing. I made KT a label. A bottle of wine, yeah.
KT: Maybe we'll maybe we'll post a photo of me holding it for everyone.
Suze: All right now. Where were we?
KT: Go back to the my quizzies.
Suze: Alright, here we go. Next.
Suze: How long can a Series I bond stay in a gift box, stay there in your account before you have to deliver it to the recipient?
KT: I don't know.
Suze: That's not an answer.
KT: Well kind of give me a guideline.
Suze: No time limit at all.
KT: That's why I said I don't know. I don't think –
Suze: All right, I'll give you a Ding Ding Ding on that. So everybody, there is no maximum amount
Suze: that that bond can sit in your gift box. You do not have to deliver it if you don't want. But remember, once it's in a gift box within your treasurydirect.gov account you can't touch it. You can't change it. It is no longer yours. It was gifted to the person that you intended it for.
KT: Suze. Wait, I have another question. Okay, so you buy me a gift box in my name
KT: and it's under my name and it's in your gift box. Something happens to me and I die. What happens to that gift box?
Suze: You have to wait for that quizzie question. Don't jump the gun here. Right.
Suze: Does the person you are gifting the bond to
Suze: have to have their own treasurydirect.gov account before you can deliver the bond to them? 00:15:52
Suze: Oh you're so good.
Suze: Did you cheat? Did you know I was going to do this?
KT: No, I did not. And I can't believe I studied all this pile of questions in front of me.
Suze: We sat here before we went on the podcast this morning. I let her go and look at em, and just pretended like this was going to be a normal
Suze: Ask KT and Suze Anything podcast.
Suze: I fooled you!
KT: You did. Now we have to do another one with all these good questions.
Suze: Alright, we can do that. Right. Just remember
Suze: that the person that you're gifting the I bond to,
Suze: they have to have their own treasurydirect.gov account.
Suze: So before you can deliver a bond to them,
Suze: you need to know their treasurydirect.gov number
Suze: for you to complete that. Alright.
Suze: Can you change your mind and decide to take that gift back once you have given it to someone? 00:16:54
KT: No way. You’re locked in.
Suze: You know you are so locked. You're locked.
KT: So you I mean I'm just thinking about people that get divorced in the middle of these gift boxes. What are they gonna do?
Suze: Anyway Ding Ding Ding. Okay. Can you deliver a portion of the bond
Suze: that's in the gift box, or do you have to deliver the entire gift that's in that box?
KT: That's a good question. I'm going to take a guess.
KT: I think you have to deliver the entire.
Suze: Oh i'm so excited to do this.
Suze: (Suze makes the "wrong answer" noise)
Suze: You can do some of it, any amount you want, and if you put in $10,000 and you want to deliver $2,000 to them, you can. Alright okay.
Suze: Does the Series I bond, once you deliver it,
Suze: count towards the $10,000 limit of the person you are giving it to?
Suze: Ding Ding ding Ding. It does. So be careful everybody. You just need to remember that. What is the maximum amount
Suze: of one purchase as a gift?
KT: $25. Oh you mean the smallest amount that you have to?
Suze: Did you just listen to my question?
KT: What is the what amount maximum amount?
KT: 10,000 and the smallest is $25. People need to know that. Because they all think you have to have 10 grand. You don't.
Suze: How many gifts can you set up
Suze: in a year?
KT: As many as you want.
KT: That's right. It is unlimited. And that includes, as I said earlier,
Suze: it's in an unlimited amount that you can give to one person. Just each gift has to have its own separate gift box. Alright,
Suze: how many gifts can you give to one person in a year?
KT: I think as many as you want.
KT: That's right. I'm driving this home everybody because so many of you are wanting to get in so much money into the series I bonds. So you're setting up trust, you're setting up LLCs, you're setting up trust accounts, all kinds of things. Sub chapter S accounts,
Suze: just so you can have
Suze: individual trust business accounts and put $10,000 each in.
Suze: Maybe it's just easier
Suze: to do a gift box with somebody who you know is going to stay in your life forever.
Suze: Also, just remember KT and everybody,
Suze: putting money in their gift box
Suze: is different than delivering money to that person.
Suze: So, there are two steps when you buy a bond in a gift box. The first step is buying it.
Suze: And it can sit in that gift box forever if you want it to.
Suze: The next step is however, you have to deliver it when you want to, to that person's
Suze: I bond account at treasurydirect.gov.
Suze: So do you think everybody understands all this so far?
KT: Yeah I get it. If I get it, they get it.
Suze: All right. If I gift or even buy for myself an I bond at the end of the month,
Suze: when does interest on that bond start earning?
Suze: So right now let's say I buy an I bond,
Suze: or a gift I bond
Suze: On June 28th.
Suze: When does that bond start earning interest?
KT: I think when you buy it.
Suze: Errrr. On June 1st.
KT: Ohhhh the month.
Suze: The month. Right?
Suze: So if all of you take note of that because if you want a free month of interest
Suze: and you do it at the end of the month,
Suze: you get a whole free month of interest because they dated back to the very first of the month that you did it.
Suze: Isn't that something?
KT: What’s wrong with them?
Suze: I don’t know. It's the government. Right. If I purchase an I bond as a gift,
Suze: then four years later,
Suze: deliver it to that person, can they redeem it in one more year without penalty? Remember, when somebody buys an I bond, they can't touch it for the first year, no matter what. Years two through five there's a three month interest penalty. So KT,
Suze: I buy you an I bond, put it in my gift box for you, it's been in there for four years,
Suze: now I give it to you. I deliver it to you. How many years before you can take it out without any penalty?
KT: One year.
Suze: Oh you're so good. You're so good.
KT: I just did the math.
Suze: Yeah well good. Alright.
KT: I just did the math.
Suze: Alright can you do the math on Roth IRA's?
KT: No, don't don't do that quizzie. Don't do that to me.
Suze: right. So are you getting this everybody? Do you understand how incredible this can be?
Suze: All right. Can I give gifts to my minor kids in a gift box?
KT: Because they're your kids. And they're minors.
KT: You have to you have to put it in. You have to do it up in your account
KT: as a custodial.
Suze: All right. She's right. Ding Ding Ding. You cannot give your own children
Suze: I Bonds in a gift box. You have got to set up a minor linked account
Suze: and buy them directly in your kid's names.
Suze: Next question. Can I give gifts of I bonds in a gift box to my grandkids, nieces, nephews,
Suze: who are minors or even kids that are you know minors kids that are friends of mine? Yes or no?
KT: Absolutely. Yes.
Suze: Alright. So do you all understand that your own kids? You cannot put their I bonds if they are minors in a gift box.
Suze: You have got to put them in a minor linked account,
Suze: in your own Treasury direct account.
Suze: If they are not your own kid,
Suze: so they are anybody else. Doesn't matter. Grandkids, whatever. You can do that in a gift box for them.
Suze: So earlier, KT, remember we talked about the difference between a secondary owner and a beneficiary? And the difference is that the two of them can do? So, next question, can you be a secondary owner on an I bond that you give as a gift?
Suze: Ding Ding Ding Ding. And the reason is, if I'm giving KT $10,000 and putting it in a gift box,
Suze: I can't change that at all. Remember, secondary owners
Suze: can sell I bonds, view I bonds, that you yourself purchase.
Suze: So when you have a secondary owner, it's like they and some level own what they can do with that bond.
Suze: you are not allowed to be a secondary owner
Suze: on a bond that you give us a gift because it's irrevocable. But can you be a beneficiary on a bond that you give as a gift?
KT: You can.
Suze: How do you know the answers to all of these?
KT: Because of, the because you and I talk about this all the time. We've been talking about it. A lot people, because we are buying these gift boxes for each other. A lot of them. Especially at our age, this is a great time to do it.
Suze: Ding Ding Ding Ding.
Suze: So I can buy a $10,000 I bond for KT, put it in the gift box, and I can make myself the beneficiary of that. Okay. So if KT dies, it will come back to me.
Suze: Can the recipient of the gift,
Suze: so once you deliver this I bond
Suze: to the person that you bought it for,
Suze: Can they change who the secondary owner or beneficiary is?
KT: I can't, I can't imagine why not. So I suppose they can.
Suze: Ding Ding ding ding again. Now you delivered it, you delivered it and now it is a completed gift. It's theirs, they can do anything that they want with it.
Suze: What happens if you die before you deliver the gift, KT?
KT: I think it's going to have to go to probate.
Suze: Nope. It does not have to go through probate because you might have a beneficiary on there. Whoever is handling your affairs should notify the person of the gift that they can claim it through Treasury Direct.
Suze: Therefore, it's always a good idea to tell the person or the parents you did that gift for, that they have a gift.
Suze: Because they might not ever know it, and therefore they would never get the money. So again, just to be clear everybody,
Suze: if you have purchased a gift box with a series I bond on it,
Suze: if you have purchased a series, I bond in a gift box, and you have died,
Suze: the person who you're giving the gift to,
Suze: needs to contact Treasury Direct,
Suze: and claim that gift.
Suze: Not probate, nothing. It just immediately goes to them, because you've already gifted it to them. 00:27:24
Suze: So it would go through probate if it wasn't in a gift box, it was in your individual account
Suze: and nobody was designated as a secondary owner or a primary beneficiary, then it would go through probate.
Suze: Again, KT, just to be clear because I can see your little face here. Alright, when you set up a gift box for somebody, you need their social security number and their name. To deliver the gift box, they have to have a Treasury Direct account,
Suze: and you need to know that number. However,
Suze: I die before I've delivered that gift.
Suze: They need to know that they have a gift
Suze: waiting for them.
Suze: They would only know if you told them,
Suze: if you told their parents. You would have to tell them. Otherwise they won't know.
Suze: Then they contact Treasury Direct,
Suze: they claim it. They set up their own treasurydirect.gov account, and Treasury Direct will give them that money. No probate.
KT: If you die…and you never told me I have a gift in there, does Treasury Direct contact that person?
Suze: No, it just it just sits there.
KT: So there's a lot of lost money.
Suze: There's a lot of lost money. That's why everybody, the question that KT asked was really smart.
Suze: Should have been your real quizzie. In that, if you're going to the trouble to set up these gift boxes with all this money in them for somebody, please let them know what you have done.
Suze: Also instruct them what they need to do if you were to die,
Suze: and also tell them that you will deliver it to them, when you want to. So they better be nice to you.
KT: You don’t have to tell them how much is in the gift box.
Suze: You don't have to tell them how much is in the gift box. You don't have to tell them to keep them.
Suze: KT We're almost at the end here, is there any tax to the recipient of the gift?
Suze: Ehhhh. No.
Suze: But right, if you just are delivering it to them, there is no tax to them whatsoever. Okay?
Suze: Now remember, you are only allowed to give up to $16,000
Suze: per person per year as a gift.
Suze: If you go over that amount, this doesn't include spouses. Spouses you can give them anything. If you give more than $16,000 to 1 person in a gift box,
Suze: you have to be careful everybody because you're going over the amount that you're allowed to give each year to people. It doesn't affect them,
Suze: but it's off your own unified gift tax return.
KT: I think that's a little bit difficult to understand when you're not supposed to 00:30:52
KT: buy more than $10,000,
Suze: KT, no, it's $10,000 in one gift box. Then I can do another gift box that year
Suze: for somebody, so now that's $20,000. I'm now exceeded the gift by $4,000 to give to that one person without any tax ramification to me. They never have a tax ramification.
Suze: But if I give more
Suze: to anybody other than my spouse $16,000 a year, then you have got to file
Suze: a gift tax return, which is the IRS Form 709.
KT: What else you got Suze?
Suze: Your last
Suze: two. All right.
Suze: Is it smart right now if you have the money,
Suze: for your spouse in particular, to give each of you as much as they can right now in gift boxes?
Suze: And why is that?
KT: The interest rate is great.
Suze: Great. Now all of you, I really want you to listen to me.
Suze: you may think they've gone a little bit crazy with I bonds.
Suze: And it's like, you know, it reminds me of when I first started talking about FICO scores. And there was a FICO frenzy, you know, I would walk down the street and people would say,
Suze: I'm a 800 Suze. I'm a 730.
Suze: Everybody was talking about FICO scores way back in the late 90s when I first started talking about it.
Suze: Now everybody is talking about I bonds. And I have to tell you, I was one of the first people to talk about I bonds. Now everybody is doing so,
Suze: The reason why these gift boxes are so important, is currently I bonds are paying 9.62% annualized.
Suze: Obviously, you only get half of that for six months.
Suze: It's based on the inflation rate that will come out in November, but chances are that inflation rate is going to be relatively high, if not higher,
Suze: maybe a little lower than it is right now.
Suze: So you don't have to buy these thinking you are going to keep them forever.
Suze: What you're going to do is, while interest rates are this high, and remember interest on an I bond accumulates. It's compounded semiannually. You do not have to pay taxes on it until you redeem it.
Suze: So the interest that you are making also is making interest. It's compounding, and right now are beating inflation.
Suze: Remember in years two through five there is a three-month interest penalty. But I have a feeling this could go on for another year. Listen it started like a year ago at 7.12%.
Suze: Then it went to 9.62%. I mean who cares if it goes to 8%.
Suze: That is a great interest rate on money that you can lock up.
Suze: So you have to lock it up for a year. Years two through five there is a three-month interest penalty, but as time goes on,
Suze: if I bonds shouldn't be purchased anymore because the interest rate becomes too low,
Suze: then you might think about starting to redeem them.
Suze: Pay the three-month interest penalty or maybe keep them five years,
Suze: and then you've made all this money
Suze: on this money.
Suze: Right? So that's why I've gone. So
Suze: I bond
Suze: crazy on all of you.
KT: I bond bonkers we call her.
Suze: Yes, bonkers.
KT: The best part about the quizzie. I get to ask you a question. How many gift boxes have you bought me?
Suze: A lot and you bought me equally as many. Alright. So tomorrow's our day that we are both going to at this moment in time, get on that plane and go fishing, what do you want to say?
KT: I want to wish my twin sister a happy, happy fabulous birthday. We are apart this year, she's with her beautiful daughters having a spa weekend and I'm not going to reveal the location but it's gorgeous. Suze and I are gonna have a surprise for her. It's a surprise. Suze and I are freezing tomorrow, catching salmon, having fun. And I just want to tell Lynn, I love you so much sister. I couldn't imagine having these 70 years without you. Happy, happy birthday, my beautiful, creative, talented and such a nice sister.
Suze: And Lynn,
Suze: I can't imagine these past 21, 22 years without you as well.
Suze: So from my heart to yours, happy birthday as well. Now I'm going to end
Suze: this podcast
Suze: with a birthday song that was created for KT.
Suze: And again, written and composed by Woody Simmons. But it's special, KT. It's special for you. So everybody listen to it.
Suze: Listen to the love that it has in it, and may you always find somebody in your life that you love as much as I love my KT. Bye bye now.
KT: I love you.
Suze: I love you more.
Music: Music plays...
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