What happens to Premium Bonds when someone dies?
If you are looking into Premium Bonds when someone dies, this guide will explain how NS&I handles them, who can claim investment and prize payouts, and whether the bonds can stay active after death.
NS&I procedures after death
Once death is reported, NS&I stops new bond purchases and freezes the account. Premium Bonds may still take part in monthly prize draws for up to 12 months. Any prizes won before or after death (within that period) are added to the estate. After the 12‑month period, no more prizes can be won, and the funds must be cashed out.
To start the claim process, the Executor or Administrator needs to complete NS&I’s bereavement claim form - either online or by post - and provide identification documents such as a certified death certificate. NS&I normally responds within about eleven working days. If total NS&I savings exceed £5,000, they usually request a Grant of Probate or Letters of Administration.
Who can claim the bonds and prizes?
Only the Personal Representative (Executor or Administrator) named in the estate can claim the bonds and any prize money. Beneficiaries or nominated individuals cannot independently cash in the bonds. Small holdings (below £5,000 across all NS&I products) occasionally qualify for simpler processing without probate, but most estates require legal documentation first for access.
Can Premium Bonds remain active?
The estate has two main options for handling the bonds:
- Keep them in the prize draws for up to 12 months, allowing any post‑death winnings to go to the estate.
- Cash them in early, receiving the face value immediately.
Inheritance Tax and estate value
Although prize winnings are tax-free, the face value of the bonds counts toward the total estate for Inheritance Tax (IHT) calculations. If the estate’s value exceeds the current Nil Rate Band (£325,000), the excess may attract 40% tax unless reliefs apply. Executors must include the bond value when reporting the estate to HMRC.
Key points summary
|
Topic |
What to Know |
|
Notification |
Inform NS&I promptly using the bereavement claim form. |
|
Prize eligibility |
Bonds can stay in draws for up to 12 months after death. |
|
Access funds |
The Executor or Administrator must cash in or keep in the drawer. |
|
Probate requirement |
A Grant is usually required if holdings exceed £5,000. |
|
Tax considerations |
Bond value is included in the estate for IHT purposes. |
Final thoughts
When dealing with Premium Bonds when someone dies, Executors should act quickly to notify NS&I, submit the necessary paperwork, and decide whether to leave the bonds in the draw or cash them in. Taking advice early and planning in consultation with beneficiaries helps strike the balance between maximising value and providing timely distribution.
