I have some Series E savings bonds with my sister as beneficiary. I am purchasing two cemetery lots on time and depending on the E-bonds for payments. If I should die before completing the payments, would my indebtedness be deducted from the bonds before my sister claims them or would they go directly to her? H.G.
Unless you are cashing individual E- bonds to pay on the cemetery lots, there is no way payments can be made from income. Series E savings bonds accrue interest through increases in their redemption value, generally each six months. Further, E-bonds are not negotiable; that is, you can't sign them over to someone and you can't put them up as collateral for a loan. If you die while still owning the E-bonds, they immediately become the property of your sister, and no one else has a direct claim on the cash.
However, if your will or final instructions direct your sister to apply the cash to any remaining payments due, that is her responsibility. Any remaining payments will not and cannot be deducted from the value of the E-bonds.