I was thinking you could just add the niece as a co-owner, and let her cash them in, but that won't work either in most cases since the bonds would not be eligible anyway for the exclusion. See here. <a rel="nofollow" target="_blank" href="
https://www.irs.gov/pub/irs-pdf/f8815.pdf">https://www.irs.gov/pub/irs-pdf/f8815.pdf</a>
The exclusion is really designed for a person to pay the education expenses of themselves or their children. If you bought a bond in 2000, and made your niece a co-owner, she would not qualify for the exclusion unless she was over 24 years old when the bond was issued (i.e. 2000). The rules on that tax form 8815 make it almost impossible to use a bond to pay for the education of anyone except your child or dependent. (Bonds issued in the name of a child when the child is little, do not qualify.)
