When Safe Deposit Boxes Aren’t Even Safe

safe deposit boxes in bank

Q. I read an interesting article about safe deposit boxes in the New York Times recently. It is focused on a man who had a valuable watch collection stored in a safe deposit box managed by Wells Fargo, possibly worth millions, who was hoping to auction it off to fund his retirement. Wells Fargo evicted him by accident and “lost” some of his prized possessions in the process of storing it off-site. His items were not recovered and he was entitled to no compensation from the bank to cover for the items they lost. This and similar situations that the author of the article describes are certainly concerning for those of us who use safe deposit boxes to store valuables.

In your experience, besides safety deposit boxes, how do people typically store original copies of their estate planning documents, incapacity planning documents, and valuables that they want to leave to their loved ones? Thanks for your help!

A. There are currently around 25 million safe deposit boxes in America, and to the surprise of many including Phillip Poniz who you referenced in your question, they provide few protections for customers. Many people who have them don’t realize that there are no federal laws that govern the boxes and no rules that require banks to compensate customers if their property is stolen or destroyed.

In the 1980s when Phillip Poniz needed a well-protected place to stash his collection of rare watches, his initial thought was the safe deposit box at the bank. Similar to many of us, his impression about safe deposit boxes was that it was “like you were putting things in Fort Knox.” He doesn’t think that anymore.

On the day he first opened the box at Wells Fargo, employees created an inventory that included 92 watches. When workers at the bank’s storage facility counted the items three decades later after it had been moved to another city, they listed only 85. Also missing were dozens of rare coins that were listed in the first inventory, but not the second. According to Poniz, photographs and family documents also disappeared. The case is still being disputed in court, and hopefully Poniz will prevail and recover some of his losses. The New York Times article made it a point to say that banks often win these disputes, unfortunately.

What’s a Person with Valuable Items to Do?

In this age of online banking, old fashioned safe deposit boxes are not as common as they once were. The largest American banks don’t even install safe deposit boxes in most new branches, and Capital One stopped renting out new boxes in 2016, according to the New York Times. This and stories of loss similar to Poniz’ make many of us think twice about having a safe deposit box, and if we do, we must consider carefully what should be stored there and what should not.

Here are a few items that you should rethink storing in a safe deposit box:

Estate Planning Documents: It’s good to keep any wills in which you’re named as the executor in your safe deposit box. Likewise, it’s a good idea to store your original estate planning documents there so long as you name your executor and agent under POA (usually the same person) as a co-owner of the safe deposit box, so this person can easily access the box upon your death or disability. The reason for this is that after your death, banks in some states will seal the safe deposit box until an executor can prove he or she has the legal right to access it. This could lead to long and potentially costly delays before your will, for example, is executed and your heirs receive their inheritances. Alternatively, especially given the slow disappearance of safe deposit boxes, many people keep their original estate planning documents in a fire and water resistant safe inside your home or in the home of your executor/trustee.

If you’re storing digital media (such as a flash drive or DVD) in the box along with paper documents, be sure to get one that says it can keep the internal temperature below 125 degrees.

Incapacity Planning Documents: If you’ve taken the right steps and completed the legal documents that would grant general power of attorney (POA) to someone you trust, that person will have the authority to step in and make decisions on your behalf if you become incapacitated.

In addition to your general power of attorney, two other documents are an important part of good incapacity planning — a special real estate power of attorney for each piece of real estate you own, and an advance medical directive. The reason for a special power of attorney for each piece of real estate you own is so that if it needs to be used, the special power of attorney can be recorded instead of your general power of attorney being recorded. It’s not a good idea to have your general power of attorney recorded because it might be lost by the courthouse after the recordation process, or may not be properly returned to you, or may take a long time to be returned to you, and your agent may need to use the general power of attorney for other things while waiting for the recorded power of attorney to hopefully be returned. A good advance medical directive is one such as our proprietary 4 Needs Advance Medical Directive®, which contains:

(1) a Medical Power of Attorney giving someone the ability to make medical decisions for you if you are unconscious or for some other reason unable to make intelligent decisions or give informed consent;
(2) Our proprietary Long-term Care Directive®, which helps you organize, store, and disseminate vital information designed to guide your future caregiver(s) in helping you get the best care and maintain the highest quality of life when you are in need of long-term care and unable to speak for yourself due to something such as a stroke or dementia; the Long-Term Care Directive® lets you identify your specific needs, desires, habits preferences, and values, and guides your caregiver in providing you the best possible care;
(3) A Near Death Directive™ which states your wishes for end-of-life care, such as whether you want a ventilator or feeding tube used to keep you alive and weather you want to be resuscitated if your heart stops; without a Near Death Directive™ (formerly called a living will), doctors are obligated to take extraordinary and perhaps unwanted measures to save you;
(4) An After Death Directive™
which allows you to state your wishes with regard to how you would like your body disposed of after your death — for example burial versus cremation; if burial, where do you want your body interred; if cremation, what do you want to become of your ashes?

None of these important documents will do you much good locked away in an inaccessible safe deposit box. At Farr Law Firm, we offer a service called DocuBank to ensure that that the incapacity planning documents you’ve completed will be there when you need them most, such as when you are hospitalized.

DocuBank is an electronic storage and access service for healthcare directives. DocuBank stores your general power of attorney along with your 4 Needs Advance Medical Directive®, and also stores your HIPAA Release forms, your blood type, a list of any allergies, and a list of your doctors, so they are available whenever you or a hospital needs them. Click here to learn more.

Jewelry and other valuables: Heirloom jewelry, such as your grandmother’s engagement ring, rare coins, and similar valuables are good candidates for a safe deposit box – but only if they’re properly insured. The FDIC doesn’t insure the contents of a safe deposit box, nor does the bank itself unless otherwise stated in your agreement. Wells Fargo, for example, explicitly states that box contents aren’t insured and advises box owners to “purchase an appropriate policy from the insurance company of your choice.”

You’ll likely need to get the items “scheduled,” which means providing original receipts and/or written appraisals. It’s a good idea to keep appraisals up to date for items that fluctuate widely in value. Be sure to take photos, too, in case you ever need to file a claim.

What if You Want to Keep Your Safe Deposit Box?

If you have a safe deposit box, it may still be a good place for originals of documents such as birth certificates and car titles, and copies of other important documents. However, it’s not a place to put cash because that cash isn’t protected by FDIC insurance like it would be if it were in a savings account. And, again, if you put valuables in a safe deposit box, be sure they are properly insured and documented, as described above.

Do You Have Your Estate Planning and Incapacity Planning Documents in Place?

Where you store your valuables and essential documents is of course important. But, what’s most important is to work with an experienced elder law attorney, such as those at the Farr Law Firm, to have your planning documents in place! If you and your loved ones have not done Incapacity Planning, Estate Planning, or Long-Term Care Planning (or had your plan reviewed in the past several years), now is a good time to plan and get prepared. Call us to make an appointment for an initial consultation:

Estate Planning Attorney Fairfax: 703-691-1888
Estate Planning Attorney Fredericksburg: 540-479-143
Estate Planning Attorney Rockville: 301-519-8041
Estate Planning Attorney DC: 202-587-2797

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About Evan H Farr, CELA, CAP

Evan H. Farr is a 4-time Best-Selling author in the field of Elder Law and Estate Planning. In addition to being one of approximately 500 Certified Elder Law Attorneys in the Country, Evan is one of approximately 100 members of the Council of Advanced Practitioners of the National Academy of Elder Law Attorneys and is a Charter Member of the Academy of Special Needs Planners.

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