Safeguarding your valuables can be worrisome. There are many things you have to consider, including where to put them and how much you want to pay for their safety. Buying a home safe is one option. Another is a safe deposit box, which you can rent from a local financial institution. You may also hear them referred to as safety deposit boxes.
Although deposit boxes are a reliable way to keep valuables safe, you shouldn't keep everything in there. Things that you will need to access quickly and easily should be kept at home. Read on for tips on what you should and should not store in your safe deposit box.
Key Takeaways
- Safety deposit boxes are designed to withstand natural disasters such as fires, floods, hurricanes, and tornadoes.
- Never store the only copy of an important document in a safe deposit box.
- Safe deposit boxes are especially useful for people who aren’t comfortable with digital storage.
- Although it's wise to have a co-lessor for your box, think carefully about assigning the best person.
How Safe Deposit Boxes Work
A safe deposit box is an individually secured container—usuallya metal box—housed in the vault of a federally insured bank or credit union. They're one of a number of services beyond banking your institution may offer. You can rent a safe deposit box to keep your valuables, important documents, and sentimental keepsakes secure.
When you rent one, the bank gives you a key to use. You'll want to hold on to this key in a safe place because if you lose it, the bank will have to charge you to install a new lock. This key is used with a guard key held by the bank—if your bank uses a keyless system, though, you’ll scan your finger or hand instead. Either way, you’ll have to provide identification every time you visit the bank. You'll also have to sign in every time you want to access your box.
You can rent a box in your name only, or you can add other people to the lease. If you opt for co-lessors, they will have equal access and rights to the contents of the box, so think carefully about whom you're thinking of adding. For example, people who have addiction, financial, marriage, or judgment issues may not be ideal candidates—even if they’re family. Still, it’s usually a good idea to name someone else to the account, so they can access the box when and if you can’t.
Benefits of a Safe Deposit Box: Security for a Small Cost
Safe deposit boxes are a great option for people for a number of reasons. For starters, they're undoubtedly more secure than most people’s homes. So whatever valuables you own, whether that's gold coins, family jewelry, or stock certificates, banks are much harder to break into and located in secure areas with alarms, video cameras, and top-notch locks. The vaults that hold safety deposit boxes are also reinforced to withstand fire, floods, hurricanes, tornadoes, and other natural disasters.
What does all this security cost? When you rent a safe deposit box, you can expect to pay anywhere from $40 to $300 each year and up. The price depends on several factors including the size of the box you rent and the bank that holds your box.
But remember, just because you have a box doesn’t mean you should put all your valuables in it. Here are tips to help you decide what to keep in—and keep out of—a safe deposit box.
What to Store in a Safe Deposit Box
Safe deposit boxes are a good place to keep hard-to-replace documents such as contracts and business papers, military discharge papers, and physical stock and bond certificates, along with small collectibles and family heirlooms. Keep in mind that the largest safe deposit boxes are usually just 10 inches by 10 inches and two feet deep. This leaves plenty of room for irreplaceable photos and Grandma’s wedding ring, but not your antique doll collection.
Good things to store in your safe deposit box are important items you won’t need frequent access to, including:
- Personal papers, such as original birth certificates, adoption papers, marriage licenses, and citizenship papers
- Copies—but not the only copies—of wills and powers of attorney
- Military records and discharge papers (e.g., DD 214s)
- School transcripts and diplomas
- Sensitive documents you wouldn’t want roommates, children, relatives, and visitors to find
- The deed to your house, along with any car titles
- Paper stock and bond certificates (though most are issued electronically these days), including U.S. savings bonds
- An inventory of your home’s contents, in case you need to file a claim with your homeowner’s insurance policy
- Important business papers, records, and contracts
- Hard drives and flash drives with backups and important data
- Financially or sentimentally valuable jewelry, collectibles, and family keepsakes
- Other documents or small items that would be difficult or impossible to replace
Important documents can also be stored digitally instead of in a safe deposit box. It is a good idea to use cloud storage for these so that you don't lose them if your computer or hard drive is damaged.
Even though safe deposit boxes are designed to withstand natural disasters, it’s a good idea to put anything that could be damaged by water into a waterproof container such as a zippered plastic bag. This adds another layer of protection and can also help you keep your safe deposit box more organized. And before stashing those important papers and photos, make copies to store electronically on your computer or in the cloud. Just be sure your family knows how to access them.
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Items You Shouldn't Keep In a Safety Deposit Box
You can access your safety deposit box during banking hours, which means you won't be able to get into it on holidays and, in some cases, on weekends. Store items you know you won't need in an emergency. Passports, medical directives, the only copies of wills and powers of attorney, and other documents that you may suddenly need are better kept in a secure spot at home, such as a fireproof home safe that’s bolted to the floor or wall.
Safe deposit boxes can’t be accessed 24/7, so don’t put anything in them that you might need in a hurry.
You’re better off keeping the following items out of your safe deposit box:
Passports
Even if you’re not a frequent international traveler, you never know when you’ll need your passport for business, a spontaneous trip, or to help a relative or friend overseas.
Sole Copies of Important Documents
The only copies of living wills, advanced medical directives, and durable powers of attorney are of little value if they are hidden away in a safe deposit box that no one can access. Tell your loved ones about the arrangements you’ve made and where they can find the documents.
Your will, for example, is an important document that you should never store the sole copy of in a safe deposit box. This is especially true if you haven’t designated a cosigner to your box. If you pass away or become incapacitated, it can be difficult for your loved ones to access your safe deposit box, and thus the only copy of your will.
It’s better to keep wills, living wills, medical directives, and powers of attorney in a secure place at home (such as that fireproof home safe) and tell a trusted relative or friend where they are and how to access them. Remember to give your medical proxy and the person who has your power of attorney copies of relevant documents.
Uninsured Valuables
Even though items in a safe deposit box are secure, you should make sure they’re covered by your homeowner’s insurance policy or a special rider, just in case—there are even companies that specialize in insuring safe deposit box contents.
Keep in mind that the money you have on deposit in a federally insured bank or credit union is protected, but items in a safe deposit box are not. Tell your insurance company that the items will be kept in a safe deposit box. You might get away with a lower premium, as the items will be more secure than they would be in your home.
Cash
The money you deposit in a federally insured bank or credit union is protected up to $250,000 per depositor per bank, but the cash in your safe deposit box is not. You’re much better off keeping your money in a savings, money market, or other type of bank account where it will be insured. You may also be able to earn a little interest, something that won’t happen if your cash is in a box.
Anything Illegal
Firearms may or may not be permitted, so ask your bank for clarification if it’s relevant. Explosives, hazardous materials, and illicit drugs are a no-no, needless to say.
Are Things In a Safe Deposit Box Insured?
Since it's considered storage and not an account, the bank doesn't insure anything in the box, but you can protect the things you store with private insurance. Cash that's not kept in a bank account is not insured by the FDIC.
Does the IRS Know About Safe Deposit Boxes?
The IRS can't arbitrarily or randomly access your safe deposit box. However, if the IRS serves a Notice of Levy or Seizure, the bank will be required to freeze your box, which prevents you from taking anything out of it. You will then be asked to open the box in the presence of an IRS representative.
Do Banks Know What You Keep in Your Safe Deposit Box?
The safe deposit box is a storage space you rent from the bank. Its contents are kept private, and the bank doesn't know what you put in there.
The Bottom Line
Safe deposit boxes are storage spaces that you can rent at a bank to protect important documents and valuable items that you don't want to store at home. Items in safe deport boxes are not insured by the bank, so anything you place there should be privately insured if it is valuable. Cash should never be placed in a safe deposit box because it will not be FDIC-protected. You should also make sure that any documents you store there have copies that are kept elsewhere.
