The Myth Of The “Safe” Deposit Box: Why Keeping Your Valuables Locked In A Vault Is Riskier Than You Think

When you go to the bank and deposit some cash into your account, that money gets recorded in the virtual accounting system that keeps track of your deposits, but it gets physically mingled with all the other money the bank has on hand that day, then loaned out to the person across town who is starting a business.

If you rent a safe deposit box at the bank and put some rare coins in it for safe-keeping, the bank is literally holding YOUR money. 

Which system keeps your money safer? Would you be surprised if the money not stored in the vault was actually more secure? 

A New York Times article highlights the risks of safe deposit boxes

The New York Times recently published an exposé on safe deposit boxes that outlines their many risks. It highlights the plight of Philip Poniz, an internationally known expert in the history and restoration of high-end timepieces, who wants everyone to know safe deposit boxes aren’t as safe as you may think. 

Mr. Poniz stored his valuable watch collection, coins, and some family photographs and documents in a safe deposit box at his local Wells Fargo. For years, he was pleased with the peace of mind bank storage offered him. Then, one day, he went to open his safe deposit box and it was empty. 

“In the days after Mr. Poniz found his box empty, he began piecing together what had happened: Wells Fargo had apparently tried to evict another customer for not keeping up with payments, and bank employees had mistakenly removed his box instead. After drilling No. 105 open, the bank shipped its contents to a storage facility in North Carolina. After Mr. Poniz discovered the loss, Wells Fargo sent back everything it had in storage, but some items had vanished.” 

He estimates the missing items are worth upwards of $10 million. 

Mr. Poniz’s loss is staggering. But his story is not unique. Each year, banks mistakenly empty safe deposit boxes across the country. There is no government body regulating safe deposit boxes, and properly managing them is expensive and tedious, so standards slip and mistakes are made. 

Unfortunately, getting the banks to own up to their mistakes is quite difficult. They are not insured by the FDIC. When the contents of a safe deposit box are lost, damaged, or stolen, the bank often gets away with paying the box renter very little compensation. According to the article, “Wells Fargo’s safe-deposit-box contract caps the bank’s liability at $500. Citigroup limits it to 500 times the box’s annual rent, while JPMorgan Chase has a $25,000 ceiling on its liability.”

Why is this important?

We bring this topic to your attention because we know many of our clients rent safe deposit boxes. It’s one of the things we discuss during the estate planning process

We talk about what is in the box, and if it needs to be specifically mentioned in the estate plan. But we also talk about access to the box and the tradeoffs that come with storing important documents in it. 

If you store your estate planning documents in a safe deposit box, your loved ones may not be able to access them after you are gone without getting a court order and paying to have the box drilled open. They may not know where your key is, and the bank may not let them use your key if they do find it. 

This can be a real problem if several of your loved ones are sure they are the person who is supposed to be in charge after you are gone. If the documents outlining your wishes are locked away, nobody will know what you actually wanted until after the courts have stepped in and made some decisions on your behalf. 

It is a far better idea to store your estate planning documents in a secure location in your own home that your preferred estate administrator has access to. Whether you decide the same is true of your valuables is up to you, but as the article put it, “safe deposit boxes aren’t safe.”