| While
millions of Americans rent a safe deposit box, few pay attention
to questions such as who could or should have access to a
safe deposit box (especially in an emergency) and how the
contents of the safe deposit box are protected. About the
only time people ever consider these issues is when there
is a problem, and then it may be too late to prevent a loss.
To help
you decide whether to use a safe deposit box, and how to use
one wisely, read the following questions and answers. To keep
things simple, our references to "banks" are intended to apply
broadly to banks, savings institutions and credit unions.
In or Out?
Why
should I rent a safe deposit box?
It is a convenient place to store important items that
would be difficult or impossible to replace. The safe deposit
box also offers privacy (only you know what is inside) and
security. Although many people like to keep valuables close
by in a closet, safe or file cabinet at home or in the office,
these places probably are not as resistant to fire, water
or theft. Also, some insurance companies charge lower insurance
premiums on valuables kept in a bank's safe deposit box
instead of at home.
What
items should go into a safe deposit box?
Any personal items that would cause you to say, "If
I lose this, I am in deep trouble." Important papers to
consider putting into your safe deposit box: originals of
your insurance policies; family records such as birth, marriage
and death certificates; original deeds, titles, mortgages,
leases and other contracts; stocks, bonds and certificates
of deposit (CDs). Other valuables worthy of a spot in your
safe deposit box include special jewels, medals, rare stamps
and other collectibles, negatives for irreplaceable photos,
and videos or pictures of your home's contents for insurance
purposes (in case of theft or damage).
OK,
what should NOT go in a safe deposit box?
Anything you might need in an emergency, in case your
bank is closed for the night, the weekend or a holiday.
Possible examples: originals of a "power of attorney" (your
written authorization for another person to transact business
on your behalf), passports (in case of an emergency trip),
medical-care directives if you become ill and incapacitated,
and funeral or burial instructions you make. Consider giving
the originals to your attorney, and making copies to go
in your safe deposit box or to give a close friend or relative.
If
I have a will, should it go in my safe deposit box?
Whether your will should be at the bank or elsewhere,
such as with your attorney, depends on what your State law
says about who has access to your safe deposit box when
you die. Ideally, the person you name to oversee your financial
matters after you die (your "executor" or "personal representative")
should have early access to your original will (copies are
not valid). Some States make it relatively easy for co-renters,
family members or the executor to remove the will and certain
other documents (such as life insurance policies and burial
instructions) from a deceased person's safe deposit box.
In those States, it may be a good idea to leave your will
in the safe deposit box. But other States may require a
court order or another official action to remove the will,
which can take time and money. That is why you should check
with a bank official (or your lawyer) to find out what is
required under State law and your bank's own policies in
the event of your death.
Access
by Others
Can
I arrange for someone to access my safe deposit box in an
emergency?
Yes. You can jointly rent your safe deposit box with
a spouse, child or other person who would have unrestricted
access to the box. (Warning: In some states your co-renter
may face delays in accessing the box if you die. Also, merely
giving someone else a key will not be enough to grant access.
He or she also must sign the bank's rental contract as a
joint-renter.) An alternative is to appoint a "deputy" or
"agent" (NOT a power of attorney) who will have access to
your safe deposit box. A deputy/agent and a general power
of attorney are similar in that you may grant or revoke
the authority at any time, and the appointment ends if you
become incompetent or die. The main difference is that a
deputy or agent is appointed in the presence of the box
renters and a bank employee, which gives the bank greater
assurance about the validity of the authorization. Many
people are surprised to find that a power of attorney does
not allow access to a safe deposit box. The bank has no
way of knowing if the power of attorney is still in effect
or if the renter was competent when the power of attorney
was signed.
Can
law enforcement authorities access my safe deposit box without
my knowledge or permission?
If a local, state or federal law enforcement agency
persuades the appropriate court that there is "reasonable
cause" to suspect you're hiding something illegal in your
safe deposit box (guns, drugs, explosives, stolen cash or
money obtained illegally), it can obtain a court order,
force the box open and seize the contents. What about non-criminal
matters, such as a dispute with the Internal Revenue Service
(IRS), a company, or other people over money they say you
owe? The IRS can "freeze" your assets (effectively placing
a hold on your bank accounts and safe deposit box) until
the dispute is resolved. Private parties also can freeze
your assets but doing so involves going before a judge and
proving that there is a legitimate dispute over a debt.
Can
a safe deposit box be declared "abandoned" and the contents
turned over to the government?
Yes, but only if you do not pay your rental fee for
a number of years (as determined by State law) and after
attempts to notify and locate you prove unsuccessful. In
that case, your safe deposit box will be reported as abandoned
and the contents will be turned over to the State's unclaimed
property office. Often this happens because the renter dies
and the heirs have no knowledge of the box or its contents.
The good news is that even if the State has sold your unclaimed
property, you or your heirs still have the right to claim
its value. To contact a State's unclaimed property office
(sometimes part of the treasurer's office), check the State
government section in your phone book. You may also contact
the National
Association of Unclaimed Property Administrators.
What
happens to my safe deposit box if my bank fails?
When an insured bank or thrift closes, the Federal
Deposit Insurance Corporation (FDIC) usually arranges
for another institution to take it over, including branches
where you might have a safe deposit box. In those situations,
you should be able to conduct business as usual. If the
FDIC cannot find a buyer for your bank, it arranges for
you to remove the contents of your safe deposit box so you
can obtain a box at another institution, if you wish. This
is done within a few days after the bank fails.
How Safe?
Are
safe deposit boxes protected from fire, flood or other disasters?
The
companies that manufacture safe deposit boxes and the vaults
that house the boxes make them highly "resistant" to fire,
flood, heat, earthquakes, hurricanes, explosions or other
disastrous conditions. However, the key word here is "resistant."
There is no 100 percent guarantee against damage, and substantial
losses sometimes occur.
Are
there extra precautions I can take to minimize damage?
Yes. Prevent water damage by sealing items in airtight,
zip-lock bags or Tupperware-style containers. Also, put
your name on each item, keep a list of the box's contents,
make copies of important documents and even take photos
of your most prized items left in the safe deposit box.
That way, if a disaster occurs, your chances of successfully
identifying, claiming or recovering an item would be increased.
Does
FDIC insurance cover the contents of safe deposit boxes
if they are damaged or stolen?
No. By law, the FDIC only insures deposits in deposit
accounts at insured institutions. Although you may be putting
valuables, including cash and checks, into an area of the
bank that has the word deposit in its name, these are not
deposits under the insurance laws that the bank can use,
for example, to make loans to other customers. A safe deposit
box is strictly a storage space provided by the bank.
Does
anyone insure my safe deposit box against damage or theft?
Unless your bank is found to be negligent in the way
it handled or protected your safe deposit box, do not expect
the bank or its private insurance to reimburse you for any
damage or loss. If you are concerned about the safety or
replacement of the items in your box, first check whether
your own homeowner's or tenant's insurance policy covers
your safe deposit box against damage or theft. Many do cover
box contents up to a certain dollar amount, even including
items lost or damaged when they are out of the box. If your
home-related insurance is not sufficient, talk to your insurance
agent about additional protection or find out if your bank
is among those selling limited insurance coverage on safe
deposit boxes. Before buying any extra coverage, carefully
review the policy and do some comparison-shopping.
Can
thieves rob a safe deposit box?
Yes, it happens, but fortunately not often. Safe deposit
boxes are stored in concrete or steel vaults equipped with
sophisticated alarms, locks, video cameras, motion sensors,
heat detectors and other security devices. Most U.S. banks
also have very strict access procedures, among them: verifying
signatures, restricting access to the vault, never leaving
anyone unattended inside the vault, and requiring two different
keys (one being the bank's "guard key") to open a safe deposit
box.
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