How Does a Safe Deposit Box Work & What to Store
Uncover the essential details of safe deposit box services, from their operational mechanics to securing your most important possessions and planning for their future.
A safe deposit box is a secure, private container typically held within a financial institution’s vault. It safeguards valuable items and important documents from theft, damage, or loss. This service is a rental agreement offered by banks or credit unions. Customers rely on the institution’s security measures to protect the contents.
Opening a Safe Deposit Box
Acquiring a safe deposit box begins with selecting a financial institution, as both banks and credit unions commonly offer these services. To initiate the rental, customers are required to provide identification, such as a government-issued ID, and complete verification steps.
A lease agreement outlines the terms, conditions, and rules for using the box. This agreement specifies the rental period and details the annual fees. Rental fees vary based on the box’s size and the institution, commonly ranging from approximately $15 to $150 per year.
The agreement also establishes who has authorized access, requiring signatures from all designated individuals. Upon completion of the agreement and payment of fees, the customer receives two unique keys for their box. It is important to keep these keys secure and separate, as the financial institution retains a master key for dual-control access.
What to Store and Not Store
Safe deposit boxes are suitable for documents and valuables that are hard to replace and not needed frequently. These include:
- Original birth certificates
- Marriage licenses
- Property deeds
- Vehicle titles
- Rare coins, stamps, jewelry, and family heirlooms
- Physical stock and bond certificates
- Military discharge papers
- Digital backups of important data
However, certain items should not be kept in a safe deposit box due to accessibility issues or lack of insurance. These include:
- Cash (not recommended because it does not earn interest and is not insured by the Federal Deposit Insurance Corporation (FDIC) when stored in a safe deposit box)
- Items needed in an emergency, like passports
- Firearms, illegal substances, and perishable items (typically prohibited by financial institutions)
Original wills, powers of attorney, and medical directives should not be stored solely in a safe deposit box. These documents may be inaccessible when needed, which could delay important legal processes. Keeping copies elsewhere, or entrusting originals with an attorney, is a more practical approach to ensure timely access.
Accessing Your Safe Deposit Box
Once a safe deposit box has been leased, gaining entry requires adherence to established protocols. An authorized individual must present valid identification to bank personnel. This verifies the person’s right to access the box, maintaining security.
Access operates under a dual-control system, meaning both the customer’s key and the financial institution’s master key are required to open the box. This system ensures that neither party can open the box independently. After the box is opened, the customer is typically escorted to a private viewing room.
Many institutions maintain a sign-in log or electronic record of each visit. This record tracks who accessed the box and when, contributing to the overall security framework.
Security Measures
Financial institutions employ various security features to protect safe deposit boxes and their contents. The boxes are housed within robust vaults, constructed with thick steel and concrete walls and reinforced doors. These structures are designed to withstand significant threats, including natural disasters.
Surveillance systems, including security cameras and alarms, continuously monitor the vault area. Access to the vault is strictly controlled, limiting entry to authorized personnel and customers. The dual-key system serves as a fundamental security measure, preventing unauthorized access by any single individual.
Bank employees undergo training and vetting to uphold security protocols. The contents of a safe deposit box are not insured by the Federal Deposit Insurance Corporation (FDIC). The FDIC only insures deposit accounts. Customers should consider private insurance, often available as an add-on to homeowner’s or renter’s policies.
Estate Planning Considerations
Upon the death of a safe deposit box holder, access to the box and its contents may be temporarily restricted. Financial institutions typically freeze access once notified of the owner’s death. Gaining access generally requires a legal process, such as presenting a certified copy of the death certificate, proof of identity, and potentially a court order or letters testamentary.
For jointly held safe deposit boxes, the surviving box holder may retain access, though the terms of the lease agreement and state laws can vary. Adding a co-lessee to a safe deposit box lease does not automatically transfer ownership of the contents to that individual upon death, unlike joint bank accounts.
To avoid delays in estate administration, it is advisable not to store original wills or other crucial estate documents, such as powers of attorney, solely within a safe deposit box. If these documents are needed immediately after death, being locked within a box can create significant complications and delay the probate process. Keeping copies with an attorney or trusted family member can facilitate a smoother transition.