This question came up in a client meeting this week, and I’ve had this same conversation dozens if not a hundred times, so I know this is an area that everyone needs to pay a little more attention to. The safe deposit box. This would be that little metal box at your bank or credit union, in a secure room full of such boxes, usually within a vault or giant safe (thus the name “Safe Deposit Box – it is a box in a safe in which you deposit your precious items or documents). These boxes can only be accessed by the owner of the box, or someone authorized in writing by the owner to access the box. And you have a key to it. But no one can access that box or the vault that it’s in unless the bank representatives allow you in.
So if you have a safe deposit box, you kind of know the routine: you check in, show your ID, you have your key, someone usually escorts you into the room. Oftentimes there are two keys, bank representative has one key and you have the other key. Sometimes there’s only a single key where they leave you to access your own box.
These boxes can only be accessed by the owner of the box, or someone expressly authorized in writing by the owner to access the box. This is where it becomes very important to understand who the owner is. Now I refer to “owner”, but more often than not, it’s actually a rental or a lease agreement. So the individual doesn’t actually own the box in the bank, the bank or the credit union owns the physical real property and the box itself, but you have the exclusive right to that little space within the box. So it’s much more like a leasehold.
The dilemma and the danger is very similar to the problems that we talked about with regard to beneficiary designations or putting someone else’s name on a bank account. More often than not, we don’t know exactly how those names are on the box – whose name is on it and how it is listed is critical to what will happen after you pass away.
If an individual has a safe deposit box, and it’s rented in their name, they are the only one that can access that Safe Deposit Box. Now, through a written agreement with the bank or credit union, they may have granted access and a key to someone else. Usually that occurs when we give one of our children a key so they can get into that box. But it’s important to understand that unless they are a co- owner or co-renter of the box itself, once you pass away that authority to access the box ceases – just like a power of attorney document we talked about last week. The authority granted during your lifetime dies with you. So that authority to access your box dies with you.
That is important because then the only way the bank or credit union will let anyone in to get the contents of that box is if they have domiciliary letters from the probate court. What that means is we have to open a probate case for your estate, just to access the contents of the Safe Deposit Box.
Now, if you have a Trust based estate plan, or if you have other simple probate avoidance tools in place, someone has gone through the trouble of trying to ensure that no one has to open a probate case. But the safe deposit box all by itself, could force the family to need to open probate. And when you go through that process, we have to complete all of the formalities of a probate court’s requirements.
It is not as simple as “Oh, we just need access to the safe deposit box”. That’s not how it works. Someone has to do all the same paperwork for the probate court just as though it’s a full-blown estate.
So here is our generic recommendation: (caveat: check with your attorney to review the specific of your particular circumstances) For anyone who has a Trust based estate plan. The solution is very simple. Put your trust on the rental agreement for the safe deposit box. That way, when you pass away, the successor trustees are already named under that trust, and they take over the full rights to access the safe deposit box.
Unfortunately, this is an area we see overlooked far, far too often. So please take a look. If you have a safe deposit box, don’t assume. Do not assume it is correct or OK because you “put our son or daughter on it.” Go ahead, check with your bank or credit union.
What names are on that box?
Are they able to access it after you pass away?
A critical question to ask: Will they be able to get into this box after I’ve passed away?
And if you have a Trust, the simple solution is to put the Trust on the rental agreement. The reason we recommend putting the trust on it instead of someone else’s name as a co-owner, is the trust has provisions that even if your first intended successor trustee is unable to act, if something has happened to them, then there’s someone else in line as a backup Trustee who would be able to access the box -it’s a much more powerful tool. It’s going to serve the family a lot better than just putting one individual’s name on just in case something bad happens to that individual.