Series H/HH Bonds are redeemable at par on demand. If a bond is redeemed before final maturity, interest ceases as of the end of the interest payment period preceding redemption. Thus, Series H bonds are valued at par for estate tax purposes, without including any accrued interest.
Methodology
How are Treasury Bills and Series E/EE Bonds priced?
United States Treasury Bills and Series E/EE Bonds are simple securities that can suddenly become very confusing when they are evaluated on the Alternate Date. They don’t seem to follow the rules—the value that appears on the Alternate Date report is exactly the same as the value that appeared on the Date of Death! Other […]
How are Mortgaged-Backed Securities (GNMAs, FNMAs, FHLMCs, CMOs) priced?
Mortgage-backed securities can be very complicated. That’s because mortgage-backed pools have several components that must be included in Date-of-Death and Alternate Date valuations. Variables in mortgage-backed securities include the market value of the remaining balance, interest accruing throughout the current interest period, any accrued principal from prior months and any accrued interest from prior interest […]
How are Municipal Bonds priced?
EVP Systems gets its municipal bond prices from Intercontinental Exchange (ICE). Through ties within the municipal bond community, ICE gets information each day on actual municipal bond sales. They use that information to estimate movements in the market for bonds and for the issues of particular municipalities. Market conditions are combined with descriptive information on […]
How are Unit Investment Trusts (UITs) priced?
Valuing Unit Investment Trusts (UITs) is particularly complex, since the underlying pooled bonds pay rates of interest on various coupon dates and mature or are called at different points in time. Besides the price of the trust per units, values such as the carryover accrual, accrued interest since the last distribution, accrued interest distributions, accrued […]
Why do Treasury Bills, Series E/EE Bonds show the same price on the Date of Death and Alternate Date evaluations?
Because the changes in the worth of these securities are caused by accruing interest, not increases in their fundamental value. And, in accordance with IRS rules, interest always ceases to accrue on the date of death. Treasury Regulation § 20.2032-1 (a) 3 reads: “Any property, interest, or estate which is affected by the mere lapse […]