A safe deposit box is a small, secure metallic container used for storing personal belongings, from money, valuable items like heirlooms or jewelry, and confidential papers and documents. And usually, any individual could rent one to hold their treasured possessions and other valuables.
Traditionally, safe deposit boxes were housed by banks or credit unions only. However, that has since changed. Today, there are private institutions offering safe deposit box services, such as Guardian Vaults. Such institutions aren't banks, but they have specialized in safe deposit box service and hire out safe deposit boxes.
How Does Safe Box Work?
The size and dimension of a safe box vary according to the type of item for safeguarding. Similarly, the price may depend on this, the financial institution, and your location. Some banks may require an initial deposit before renting, and charges can be settled monthly or annually.
To access the safe box, you’ll need a key. Since you’re hiring the safe deposit box from a banking institution, in most cases, a banker managing your safe box also has a key that can be used simultaneously with yours to access your safe deposit box. Therefore, your safe deposit box will still be safe even in the event that your key gets compromised.
Best Practices Safe Box Owner Should Implement
Using a safe deposit box can provide you with several benefits. But to fully maximize them, it’d be good to be familiar with the best practices for safe deposit box management. To start, here are some of them:
1. Know What To Store And What Not To
One of the essential aspects of managing your safe deposit box efficiently is knowing what to store and what not to.
While a safety deposit box is generally meant to store valuables you wish to keep- assets like family heirlooms, photographs, coin collection, other precious collectibles, and papers like birth certificates, it’s recommended that you avoid storing items you need every once too often or tend to use regularly. It’d be good to note that access to your safe deposit box may be limited, especially since most institutions have specific business hours. Beyond that, they may not be able to assist you in retrieving your valuables, such as important documents.
The same can be said for documents you may need in an emergency or under short notice, such as will, medical directives, and passports in a safe deposit box. In this case, perhaps the best you can do is store a copy of those files instead. While you may not need to access such documents regularly, their importance may be urgent, and not acquiring them on time may cause a problem.
To give you a brief idea, here are some of the documents you may consider storing in a safe deposit box since you may not need to access them regularly:
- Birth certificates
- Marriage certificates
- Stock certificates
- Saving bond papers
- Title papers for your cars
- The title deed to your home where you live
In addition, it’s also not recommended to keep your money in a safe deposit box. If you have to save money, some of the best ways include opening a savings account or investing.
2. Plan On Who Can Access Your Safe Deposit Box
Once you know what you'll be keeping in the safe deposit box, you can start arranging who can access the safe deposit box aside from you. Usually, third parties are allowed to access your safe deposit box. However, they have to be named, and the bank should be aware of such arrangements. Otherwise, they can't show up and request access to your safe deposit box.
So, why is it a good practice to plan on who can access your safe deposit box? For starters, it means that in the event of any unfortunate circumstance, like death, there would be someone authorized who can retrieve the valuable items or documents and probably use them to help the people you left behind.
3. Make A Habit Of Reviewing Your Safe Box Annually
Even though you may not need the items stored in a safe box regularly, it's still vital that you check on them once in a while. Experts recommend you check on your valuables or documents at least once a year.
Doing so is crucial if more than one person can access your safe box. To help you remember the items in your safe deposit box, experts advise that you put a list of your belongings in the safe deposit box and another copy at home. And so, when reviewing the content of your safe deposit box, you can countercheck against the list.
4. Ensure Your Valuable Items or Documents
Generally, your money is federally insured when you open a deposit bank account in a Federal Deposit Insurance Corporation or FDIC-insured bank. Therefore, you're eligible for compensation if anything happens to your money.
However, although a safe deposit box is housed in a bank, the box's content isn't insured by the FDIC. And as such, should anything happen to the contents of your safe box, the bank isn't mandated to compensate you. In general, most financial institutions don't offer separate insurance for safe deposit boxes.
Therefore, since your valuables are at risk of damage from natural disasters like floods, theft, or fire, experts recommend that you purchase insurance for your valuables or documents. You can secure the content of your safe deposit box by adding a special policy to your home insurance. Alternatively, you can seek the service of companies that specifically offer insurance for safe deposit boxes. Either way, ensure you protect the contents of your safe deposit box against damage or loss.
5. Photograph The Contents Of Your Safe Deposit Box
If you're using your safe deposit box to secure items like coins or jewelry, it's best if you photograph them in the condition when you've stored them. That way, should you find the items damaged or scratched, you can have a point of reference when presenting your claim.
After photographing the valuables, keep a copy of the photo at home and another one with your lawyer for representation purposes.
6. Pay For Your Safe Deposit Box In Time
As mentioned before, the items that go into a safe deposit box are ideally not used frequently. As such, you may forget about your safe deposit box in general and even the charges for renting one. Depending on your state or location, an unpaid safe deposit box for more than one year can be listed as unclaimed by the bank. In such a case, the bank can then open them, and the items therein will be sold to compensate for payment.
This builds up to the next point about giving the power of attorney access to your safe deposit box or any other trusted executor in the event you die, and there's no listed third party. Read more about this below.
7. Give A Trusted Executor Access To Your Safe Deposit Box
Nobody likes to think of death, but not thinking about it doesn't negate its certainness. Therefore, if you don't have a listed third-party member who can access your safe deposit box, it's always good practice to mention an executor who can access the safe deposit box should you die. The executor can be the power of attorney, a trustee, or a family member you trust to honor your instructions.
Best Management Practices For Banks, Credit Unions, And Other Institutions Renting Out Safe Deposit Boxes
As an institution, it is highly crucial that you provide a superior standard for your clients. For one, this allows them to access and safeguard their valuables privately and securely.
That said, here are some best practices you can observe and do.
1. Ensure The Safe Deposit Box Is Made Of Quality Material And Most Secure Technology
One of the essential aspects of managing your safe deposit boxes is ensuring they're made of high-quality material. For example, the gates, doors, and locks should be of excellent quality. To ascertain this, check that the mentioned parts of the safe deposit box are tested based on your state standards. For Americans, the quality of the safe deposit box should be performance tested under the American Society of Testing and Materials standard. If it passes this test, the safe deposit box is in good condition to work and deliver.
Furthermore, the security and alarm system should be up-to-date with technology. It can help guarantee that there would be nothing that can be used to compromise the safety of your customers' items. For example, the alarm system should have water, heat, sound, and door contact detector. These detectors can be significantly beneficial for alarming the management in the event of threats such as floods, fire, and theft.
Finally, it would be best to implement additional safety preventive measures to help decrease the chances of fraud. Also, if you're renting out a safe deposit box with a previous owner, make sure you change the tumblers or rotate the locks so that the key is different.
2. Verify Owners’ Identity When They Come To Access The Box
When renters of the safe deposit box want to access their belongings, it's vital that you first verify their identity. It can help reduce cases of impersonation or identity theft, which may lead to the owners losing their valuables.
When verifying their identity, record everyone who accesses the safe deposit box. Doing this allows you to have a record that can help track the people who access the safe box should you need to.
The safety of your client's items and documents is the foundation of your business. Therefore, you must go all out to ensure that safety is guaranteed and reliable.
3. Track The Access Of Non-Renters
Sometimes people who aren't owners of the safe-deposit boxes may have to access the vault. For example, this may include the property custodians who need to enter and maintain the vault occasionally. Or, in the event of death, law enforcement may need to access the safe deposit box on request. Should this happen, the institution is advised to track who accesses the safe depot box. The people should also be searched for and subjected to other procedures for accessing a safe deposit box.
4. Allow Renters To Review Their Boxes
It may help if you allow the renters to review their valuables, even when they don't need to withdraw them. When reviewing the items, there are some pointers you can consider implementing.
- Safe box renters shouldn't enter the vault room alone. It's always recommended that they are escorted by an employee who can direct them to view the contents of the safe box privately. That also says that the employee shouldn't fetch the safe box from the vault. The two parties should be there in the entire process.
- Avoid having waste bins or containers where items can be hidden in the viewing room. It could ensure that neither the employee nor the renter hides the contents of the safe deposit box and then makes false claims. Additionally, when exiting the viewing room, both parties should be inspected to ensure that they haven't carried the contents of the safe deposit box.
- When locking the safe deposit box, let the renter ascertain that all the contents are in place and good condition.
- Most importantly, the employees shouldn't be allowed to access the contents of the safe deposit box. It ensures that the renter can't lodge any claims sighting theft or damage of items.
5. Have Dual Control For The Vault Keys
The safe deposit box is generally housed in the vault. Experts recommend that the keys to the vault are placed under dual control. That means there's not one single employee with the keys to the vault but two. Therefore, if one is compromised, the vault is still safe since there is another key.
Wrapping It Up
Running a safe deposit box is a team effort. It requires both the renters and the institution to ensure safe and secure storage. Therefore, both teams are ideally recommended to learn and implement the best practices when managing the safe deposit box. Fortunately, this article has outlined some of the pointers you can consider.
Aidan has been writing about personal finance for over 6 years. Prior to this, he worked as a Corporate Finance Analyst where he specialized in Due Diligence, Company Valuations and more. He is a CFA charterholder.
