Safe deposit boxes are a danger hidden in plain sight.
It is tempting to think of them as an appropriate repository for all things valuable: jewelry, coins, cash, wills, powers of attorney.
Think again. Some types of valuables are simply not appropriate for a safe deposit box.
You should not put anything in the box that you may need to gain access to quickly or when the bank is not open. For that reason, passports, powers of attorney and wills should normally not be placed in a safe deposit box.
Cash is another valuable that should not be placed in the box. Cash that is not in a deposit account is not protected by FDIC insurance. Money in a safe deposit box will not earn interest, so the purchasing power of your cash will decrease. Your bank may also limit, through its rental agreement, your ability to keep cash in the box.
Banks do not insure the contents of a safe deposit box. If you want protection, talk to your homeowners or renters insurance agent about adding coverage for it.
Safe deposit boxes are not completely safe from theft, fire, flood or other loss or damage. The bank does not owe you a duty of good faith to protect the box’s contents. If you do place papers in the box, then place them in a water-safe, zippered plastic bag. Keep your safe deposit key separate from identifying information such as the box number and bank number, in case of loss or theft.
What types of things are appropriate to be placed in a safe deposit box? Originals of key documents such as birth certificates and property deeds, family keepsakes, valuable collections, pictures of your home’s contents for insurance purposes and irreplaceable photos. Keep a copy of documents in another location.
Now let’s talk about access. You can jointly rent a safe deposit box with someone who will then have unlimited access. Just be aware that the other person will be able to remove items without your permission.
What happens to the contents of the box when you die? Glad you asked. Texas has a statute that addresses that very question.
After your death the bank may, without a court order, allow a few select people to examine the contents of your safe deposit box. That group consists of your spouse, your parent, your descendant who is at least 18 years old or the person named as executor of your estate in your will. The bank must have a representative present when that person is looking through the box. The purpose of the examination is to discover if the box contains your will, burial instructions or life insurance policy.
If the documents are discovered, then the statute is specific about who can receive what. Your will can only be delivered to either the clerk of the court having probate jurisdiction over your estate or to the named executor of your estate. Burial instructions can be delivered to the person making the examination. An insurance policy can be delivered to the named beneficiary.
If a bank requires a court order, then Texas law obligingly sets out the procedure, which is onerous, time-consuming and expensive. After a probate estate is opened, your executor can take possession of the box’s contents.
If you decide to use a safe deposit box, then read the rental agreement, insure the contents, be selective about what you place inside and tell your agent and executor where the box is located.
Attorney Virginia Hammerle has been board-certified in civil trial law for 25 years. Her practice includes estate planning, guardianship, probate and litigation. See her blog at hammerle.com or sign up for her newsletter at email@example.com. This column does not constitute legal advice.
Alice J. Roden started working for Trending Insurance News at the end of 2021. Alice grew up in Salt Lake City, UT. A writer with a vast insurance industry background Alice has help with several of the biggest insurance companies. Before joining Trending Insurance News, Alice briefly worked as a freelance journalist for several radio stations. She covers home, renters and other property insurance stories.