What Is a Flower Bond?

Getting a Flower Bond

• Citizens once were able to purchase flower bonds from the United States government. A person could go through a bank representative or a portfolio manager/stockbroker to purchase a flower bond, or he could purchase it directly from the U.S. government. Buying a flower bond was one way a citizen could "pre-pay" estimated estate taxes.

In Case of Death

• If a citizen who had purchased a flower bond passed away unexpectedly or before the bond matured, the flower bond could be matured "at par value," according to Investopedia, and could be used to pay for the deceased citizen's federal estate taxes.

Meaning Behind the Name

• There is a special meaning behind the name "flower bond." The idea is that once the bond "blooms" or "blossoms" at maturity, it will pay for the entirety of the bondholder's federal estate taxes.

Issuing Bonds

• Most flower bonds were issued in denominations of $500 to $1 million. These bond increments must be used to pay for the estimated federal tax. Therefore, if you estimate that you will owe the U.S. government $10,200, and the lowest bond available is $500, you will be able to purchase only $10,000 worth of $500 bonds to set aside for your estimated federal estate tax.