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.
What Not to Store in Bank Safe Deposit Boxes
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 homeowner’s or renter’s insurance agent about adding coverage.
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 to Store in Bank Safe Deposit Boxes
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.
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.