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Estate Planning: Don’t Overlook Your Safe Deposit Box

Whether you have an estate plan in place or are in the process of estate planning or you have procrastinated about estate planning, you may wish to consider the pros and cons of a safe deposit box (also commonly called a safety deposit box) in your estate plan.

At one time, safe deposit boxes were widely used. Fewer people today are leasing them, opting for digital storage for documents and home safes for other valuables. There are several reasons for their decline in popularity. There is a growing awareness of the shortcomings in using safe deposit boxes. There have been publicized complaints about missing contents which have eroded the public’s confidence in the level of security and protection offered by the banking system.

Advantages and Disadvantages

The primary advantage of a safe deposit box is that it provides a secure place for safe storage of important documents and other valuable items, lessening the risk of misplacing items and ensuring privacy. Bank vaults are secured with alarm systems, cameras and quality locks. There are also banking protocols in place to access the safe deposit boxes. Clients are escorted to the vault by a bank representative. Two keys are required to open the box: the bank representative has a key and the client has another key. A signature card records the date and time of access and the signature of the person who accessed the box.

One of the primary disadvantages is that the contents of a safe deposit box are not insured by the Canada Deposit Insurance Corporation, unlike the protection provided for a bank account and other investments with the bank.

The second disadvantage stems from the restrictions regarding the contents of a safe deposit box that are set out in the contract the client signs with the bank. These contracts may vary in detail but generally they contain two notable clauses: (1) a clause prohibiting the storage of cash, precious metals of a specified amount or size, firearms or illegal drugs; and (2) a clause exempting the bank from liability for items that are missing. With respect to the first restriction noted above, concerning the contents of a safe deposit box, storing cash is not advisable for several practical reasons, aside from the contractual prohibition: loss of interest and limited access to banking hours in case of an emergency requiring cash. If you wish to store valuable jewellery in a safe deposit box, you should verify whether the terms and conditions of your homeowner’s insurance policy allow extended coverage for jewellery stored outside your home.

Estate Settlement Issues

While most people do not seem to give much thought to the safe deposit box they lease, they should consider the foregoing pros and cons when doing estate planning because of the potential for conflicts and disputes that a safe deposit box can ignite during the settlement of an estate.

The first issue that may arise is access to the safe deposit box. If there are co-lessees of the safe deposit box, that could be problematic. The surviving co-lessee may decide to access the box after the death of the other co-lessee which may fuel accusations of suspicious behaviour involving alleged removal of items of value from the box. Only the liquidator of an estate is legally entitled to access a safe deposit box after providing the bank with the required estate documents (e.g., death certificate, will search certificates and will).

Gaining proper access to a safe deposit box for the settlement of an estate is crucial because it is necessary for the purpose of identifying relevant documents and compiling an accurate inventory. This task is an integral part of the settlement or liquidation process for an estate. The liquidator has a duty to collect and safeguard all the deceased’s assets, including those in a safe deposit box. It is an advisable and prudent practice for a liquidator to access the safe deposit box accompanied by a notary who will draw up a proper inventory of the contents thereof – actually, Article 478 of the Code of civil procedure requires it. This practice provides transparency to all the heirs and provides protection for the liquidator.

It should be noted that often there are delays in making an appointment to open the safe deposit box. The bank must receive and process all the estate documents. Then there might be a scheduling issue depending on the availability of the bank’s representative and that of the liquidator(s) who might have to attend in person at the bank, depending on the particular bank’s internal procedural policy. Delays can be further prolonged by the loss of safe deposit box keys. Lost keys is a frequent occurrence in estate settlements. In this event, it is necessary to arrange with the bank to have the safe deposit box drilled open by a locksmith. Fees are charged by the locksmith for this service.

It may be possible to gain access to a safe deposit box after a lessee’s death to check for a will, but not to remove any items. This is an appropriate time to emphasize that certain documents should not be kept in a safe deposit box. Given that in Quebec the vast majority of wills, powers of attorney, protection mandates, advance medical directives and title deeds to immovable property are in notarial form “en minute”, there is no need to store them in a safe deposit box. The original of a notarial act “en minute” is always retained by the receiving notary and if he or she no longer is practicing, the Chambre des notaires will be able to indicate where that notary’s documents are, either with another notary or at the Superior Court of Quebec. A authentic copy of a notarial act is always available to a person who establishes his or her interest to have the copy, as for example, a party to the act or his or her legal representative. Keep in mind that even if a copy of a notarial will is lost or misplaced, will search certificates are compulsory estate documents in Quebec for the liquidation of an estate and the lost will and testament, if there ever was one, would be indicated on either of the certificates and the name of the notary or lawyer who has it in his or her records.

In addition, funeral or burial instructions should not be kept in a safe deposit box. They should be communicated to a person’s liquidator or family members so that they are readily available. Passports should also not be stored in a safe deposit box since they will not be easily and quickly available for emergency travel. A lost passport can be replaced on an urgent or expedited basis from the Government of Canada.

At one time, a safe deposit box was a secure place to store Canada Savings Bonds, issued in paper form as negotiable instruments. Similarly, share certificates were stored there, however, paper-form share certificates are rarely issued. You should also be aware that the bank has no knowledge or record of the contents of a safe deposit box nor of what is removed from the box. Therefore, in the event a dispute over the loss of any of the contents, the client has little or no recourse against the bank.

What is advisable is that a client keep an up-dated inventory of the contents of the safe deposit box. It is also highly advisable to keep at home an up-dated inventory of assets and liabilities, especially of the location of bank accounts, safe deposit box and keys, investment accounts, insurance policies and real estate since such an inventory greatly facilitates the estate settlement process. Remember, that there is no central registry or depositary for information about your bank accounts, safe deposit boxes and investment accounts.

Several people forget they even leased a safe deposit box and if the rental fees are not paid and notices sent by the bank have been mis-addressed or ignored, the bank may drill open and empty the box. The contents will eventually become unclaimed property and be turned over to Revenue Quebec. Such surprise outcomes have come to light during estate settlements, entailing delays, costs and ultimately frustration and disappointment.

A final bit of advice: ask yourself, if you do have a safe deposit box, whether you really need one anymore. Perhaps you will realize that the box only contains inconsequential items or is empty and really serves no useful purpose. By doing so, you may make your estate settlement a less burdensome process for the liquidator.

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Authors

Marilyn Piccini Roy, Ad. E., TEP

Lawyer, Partner and Head of the Estates, Wills and Trusts Group

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