Clients often ask if they must keep important papers, such as their Will, Deed or life insurance policies, in a safe deposit box. The simple answer is "no", but there are pros and cons to consider when deciding what to keep in a bank safe deposit box.
One of the main issues to consider is access. If you rent a bank safe deposit box, it is recommended that you hold the box jointly with someone (a spouse, parent, child, etc.), or at a minimum, appoint someone as deputy (one entitled to access) on the box. If you are ill, out of country, or otherwise incapacitated, and something must be obtained from your box, the joint owner or deputy can get in to the box for you. You can also give someone access to your box during your lifetime via a Power of Attorney. Each entry to a safe deposit box is logged-in by a bank employee, providing a record of who had access and when.
There is often confusion about whether to leave a Will in a safe deposit box. You can lodge your Will with your attorney or keep it in your home in a safe place such a as fire-proof metal box. This makes it easy to get to the Will after your death, and if the Will is your primary document of concern, this type of storage is probably preferable to storing it in a safe deposit box. However, you may prefer to keep your Will in a safe deposit box to guard against fire, theft or loss, or simply for privacy or protection. This is perfectly acceptable, because even though bank signs may state that no one is allowed access to the safe deposit box upon your death, there are 2 exceptions. If a husband and wife rented the box jointly, after one spouse's death the other has access to the box. Also, the Executor named in a Will is permitted to enter the box to retrieve the Will, a cemetery deed and burial papers. This access is supervised by bank personnel, and only those items can be removed then.
This highlights a complicating factor concerning safe deposit boxes: even if a box is empty, or contains only a Will, cemetery deed or burial papers, after the initial entry to retrieve those items from a decedent's box, all other items must remain in the box until an Estate is opened and the Register of Wills appoints the Estate's Executor or Administrator. Only then can the Estate representative get a court document called a "short certificate", which the banks require for further entry to a decedent's box. After issuance of the short certificate, an inventory of the box must be scheduled through the Inheritance Tax office or the attorney handling the Estate can get the State's permission to conduct the inventory. A State Inheritance Tax representative typically conducts a formal inventory of the box in the presence of the Estate representative, and only after the inventory is concluded can the remaining contents be removed and the box closed. The purpose of the inventory is to determine the presence of any items subject to inheritance taxes. At the inventory, the State representative or authorized attorney will make a detailed list of all items in the box and submit it to the PA Department of Revenue. Any items of value must be appraised. Sometimes, an empty box is the only item in a deceased's name, yet current PA law requires the probate of an Estate merely to dispose of the box. Therefore, using a box just to hold your Will, if you have no other assets in your own name, may not be worth the resulting inconvenience and expense.
Should you hold items of value for someone else in your box? This is not advisable. After your death, once the box is opened and inventoried, any item with monetary value will be credited by the Inheritance Tax representative as an asset of your Estate. The item must be appraised and tax will be assessed on the value at either 4.5% or 12%, depending upon the relationship or the recipient. This may seem unfair, but the Tax personnel have no way of knowing who the item belonged to and therefore will tax the owner of the safe deposit box. Marking items may help, but is not foolproof.
Often, people keep items of little monetary value in safe deposit boxes. Typically, people keep their original deeds, mortgages, or car titles in their boxes. It is noteworthy that any of these items can be replaced if they are lost or misplaced probably for less than the safe deposit box rental fee. Many people keep coins in their boxes. Many inventories of safe deposit boxes have been conducted with the result that the contents consisted of large quantities of coins the box owner felt were valuable. The tax representative must list each coin by description, and then the coins must be appraised. The appraisal fee may be more than the value of the coins! Therefore, it is suggested that you make sure coins are really rare and valuable before they are stored in a safe deposit box.
If you truly can't keep track of your paperwork, require absolute privacy, or need a safe place to keep valuable and irreplaceable items, a safe deposit box is a solution. However, it is wise to evaluate the consequences of keeping replaceable documents or items of insignificant monetary value in a safe deposit box, because depending upon circumstances, the cost of the box and resulting inconvenience can be prohibitive in comparison to the value it actually serves.