Premium bonds on death of holder - Explained

The passing of a loved one often brings with it a host of financial tasks, and one asset you may need to address is any Premium Bonds on death of holder. Premium Bonds, issued by National Savings & Investments (NS&I), are a popular, tax-free savings product in the UK. However, when the bond holder dies, the process of claiming the investment and any prizes can be confusing. In this article, we’ll guide you through what happens to Premium Bonds when the bondholder passes away, how to make a claim, and what information and documents you’ll need.

What Are Premium Bonds?

Before diving into the process after death, let’s recap what Premium Bonds are:

• A savings product backed by the UK government (NS&I).
• Bonds are entered into a monthly prize draw instead of earning interest.
• Prizes range from £25 up to £1 million, tax-free.
• Bonds can be cashed in at any time, usually without charge (up to a limit of £50,000).

Premium Bonds on Death of Holder: Who Can Claim?

When the bondholder dies, the person entitled to claim the Premium Bonds depends on whether the bonds are held individually or jointly:

1. Individually Held Bonds
   • The deceased’s estate can claim repayment.
   • The executor or administrator of the estate is responsible for claiming funds.
2. Jointly Held Bonds
   • Bonds automatically pass to the surviving holder.
   • A simple transfer form is needed to update NS&I records.

Do Premium Bonds Form Part of the Estate?

Yes. Premium Bonds held individually do form part of the deceased’s estate. The executor or administrator must gather all assets—including bonds—and settle debts before distributing any funds to beneficiaries. For small estates (under a certain threshold), a simplified process may apply.

How to Claim Premium Bonds After Death

Follow these steps to claim Premium Bonds on death of holder:

1. Register the Death
   • Obtain the death certificate.
   • You’ll need several copies (NS&I often requires the original or a certified copy).
2. Gather Bond Details
   • Locate the NS&I Premium Bond book (if a paper certificate was issued).
   • If the bonds are held online, log in to view the bond numbers.
3. Download the Required Forms
   • Visit the NS&I website and download the “Claim on Death” form.
   • If you’re the executor, also complete the “Executor’s Certificate” form.
4. Complete the Forms
   • Provide details of the deceased, policy numbers, and your own contact information.
   • Specify whether you are an executor, administrator, or next of kin.
5. Submit Documents
   • Send the completed forms, death certificate, and any Probate Order (if required) to NS&I.
   • For estates under £15,000, NS&I may accept a simple claim without full probate.
6. Wait for Processing
   • NS&I aims to process straightforward claims within two to three weeks, but more complex estates can take longer.
7. Receive Payment
   • NS&I will repay the bond value plus any unclaimed winnings.
   • Payment is made by cheque or direct transfer into a nominated bank account.

What Happens to Prize Draws After Death?

NS&I typically includes all winnings up to the date they register the death. Any prizes won between the date of death and the date the claim is processed will also be paid. However, winners’ lists are published monthly, so if you miss a draw, those prizes will still be included in the payout once your claim is settled.

Do You Need Probate to Claim Premium Bonds?

• Small Estates: For estates valued below the probate threshold (currently £5,000 in England and Wales; check Scottish and Northern Irish thresholds), NS&I may not require full probate.
• Larger Estates: Executors usually need to provide a Grant of Probate (or Letters of Administration) before NS&I will release funds.

Tax Implications

One of the main attractions of Premium Bonds is that winnings are completely tax-free. There are no income tax or capital gains tax implications for the bondholder or their estate. However, the overall estate value— including Premium Bonds—may affect inheritance tax calculations if the deceased’s estate exceeds the nil-rate band.

Common FAQs

Q: How long does NS&I take to process a claim?

A: Simple claims can be processed within two to three weeks of receiving all documentation. Complex cases or those requiring probate can take several months.

Q: What if the Premium Bonds were held online?

A: You can print out the e-bond statement with policy numbers. If you can’t access the online account, complete NS&I’s online claim form and provide relevant identification.

Q: Can I claim on behalf of a spouse?

A: If bonds were held jointly, the surviving spouse can transfer ownership online or via a paper form. No death claim form is needed.

Tips for Executors and Administrators

• Keep Detailed Records: Record bond numbers, policy details, and correspondence with NS&I.
• Check for Unclaimed Winnings: Sometimes winnings go unclaimed if prize draws are missed.
• Use Certified Copies: To avoid sending original documents, use certified copies of the death certificate and Grant of Probate.
• Contact NS&I Early: Prompt notification helps ensure all prizes up to the date of death are included.

Conclusion

Handling Premium Bonds on death of holder can seem daunting, but with clear steps and the right documentation, the process is straightforward. Make sure to register the death, gather all bond details, complete NS&I’s forms, and supply any required probate documents. Whether you’re an executor settling an estate or a surviving joint holder, you’ll soon receive repayment of the bond value and any unclaimed prizes—tax-free, as always.

By following the guidance above, you can ensure that Premium Bonds are handled efficiently and fairly after the bondholder’s death, giving beneficiaries the funds they are entitled to.