NESDA NewsletterVol. IX Issue I October/November 2008
Serving New England’s Financial Institutions since 1917
Wednesday, November 19, 2008
Benjamin’s Restaurant, Taunton, MA
‘Deal or No Deal’ Safe Deposit Style
Wednesday, March 18, 2009
Holiday Inn Select, Woburn, MA
33 New England Educational Conferencerd
Wednesday, May 20, 2009
Danversport Yacht Club, Danvers, MA
Annual Meeting/Past Presidents’ Night
‘Legal Night’
Make your reservation today by calling (781)438-9400,
X126 or by email at [email protected]
N.E.S.D.A.’s President’s for 2008/09Eastern Massachusetts Region
Amy Briggs
Bristol County Savings Bank
508-824-4084
Western Massachusetts Chapter
Linda Gouvin
Country Bank
413-277-2108
NESDA disclaims any responsibility for statements, opinions,
and/or advice expressed in this newsletter.
Financial Institutions should always adhere to their own Policy
and Procedure manual, as well as consult their Legal
Department. Comments and questions should be
addressed to the NESDA’s Editor.
W. Toth, NESDA Editor
c/o Stoneham Savings Bank
359 Main Street
Stoneham, MA 02180
“I awoke this morning with devout thanksgiving for my friends, the
old and the new.”
Ralph Waldo Emerson (1803 - 1882)
pg. 2, Vol. IX Issue I October/November 2008
CONSUMER BANKING:
A safe deposit box is not the best place tostash cashBy Gail Liberman and Alan Lavine
PALM BEACH GARDENS, Fla. (MarketWatch) --
Better think twice about storing cash in a bank safe-deposit
box, because it's not as safe as you might think.
Contents of safe-deposit boxes can be destroyed, as they
were during the W orld Trade Center attack. Hurricane
Katrina wiped out some 250 vaults, said Margot Mohsberg,
spokeswoman for the American Bankers Association.
Unless you've confirmed that your homeowners insurance
policy covers the contents, "nothing in that safe deposit box
is insured," said David McGuinn, president of Safe Deposit
Specialists in Houston. And, he said, "Your homeowners
insurance policy won't insure cash, either."
But due to the global financial crisis, more people might see
safe-deposit boxes as a way to keep their cash safe.
McGuinn said he fears that's exactly what may be
happening as more bank accounts are closed during this
economic meltdown.
There's some evidence that even before the current crisis
savers were stashing cash in bank safe deposit boxes.
About three years ago, a Pennsylvania Department of
Revenue survey of 687 safe deposit boxes found that 172
had "cash or coins." However, McGuinn says the latest
economic news may be moving more to use bank safe
deposit boxes for liquidated cash.
The FDIC, which covers deposits at federally insured
financial institutions if they fail, does not cover contents of
bank safe deposit boxes. The contents are property of the
consumer, not the bank. If a bank fails, box renters
generally have immediate access, or if a bank is closed, will
likely find a notice on the front door with a contact number,
McGuinn said.
"Every safe deposit box contract I've seen specifically
excludes cash from being in a safe deposit box," says
Joseph Oliva, attorney with Sedgwick, Detert, Moran &
Arnold LLP, in New York. Oliva, who has investigated
claims on bank fidelity bonds, says courts have upheld
those contracts.
There are other issues to consider with a bank safe deposit
box:
·The U.S. Department of Homeland Security can
access your safe deposit box if a bank files a
suspicious activity report, McGuinn said. However,
a court order is required.
·The IRS can freeze assets, effectively placing a
hold on your safe deposit box until a dispute is
resolved.
·Heirs could face hassles if a safe deposit box
owner dies. Pennsylvania, for example, requires a
bank employee, an estate attorney or a revenue
department employee to inventory safe deposit
boxes before most contents can be removed.
"Most state laws will allow the surviving lessee, if
there is one, to access the box after a death,"
Mohsberg said. "Many states rely on the lease
contract to cover access rights."
Nevertheless, safe deposit boxes remain an attractive place
to store valuables and copies of certain documents.
Fewer boxes available
Available boxes, though, may get tougher to find. New bank
branch construction has declined in the last year and the
average number of boxes being purchased is trending
downward, said Randy Benore, director of product
management and planning for Diebold Inc., in North
Canton, Ohio. On the other hand, more credit unions offer
them as a service.
New bank vaults have up to 30% fewer safe deposit boxes
compared with about 10 years ago, Benore said.
Cost to rent a small box averages just $25 annually,
according to the American Bankers Association. Some
banks offer discounts to existing customers.
Virtual safe deposit boxes are another option for storing
important documents. For example, W ells Fargo Bank's
"vSafe" provides online access to electronic copies. W hile
its cheapest safe deposit box averages $30 annually, one
gigabyte of online space costs $4.95 monthly, or about $60
a year.
What to do
If you are using any type of bank safe deposit box, consider
these issues:
·Be sure your homeowners insurance covers safe
deposit box valuables, even if it means paying an
added premium.
·Put valuable contents in sealed plastic bags and
photograph them. Also, get appraisals of valuables
and keep receipts. Although banks typically are not
liable for contents lost in a disaster or terrorist
attack, they often try to work with customers, Oliva
said.
·Make sure your heirs know you have a safe deposit
box. Otherwise, when you die, contents could
revert to the state.
·Be very specific about safe deposit box access in
your power of attorney documents.
·Avoid storing in the box original documents you
might need to access immediately, such as a
power of attorney, passports, medical-care
pg. 3, Vol. IX Issue I October/November 2008
· directives, funeral instructions and, depending upon
your state, a will.
·Read the contract for your box carefully. Also,
Mohsberg suggests, appoint two lessees to ensure
accessibility.
·Understand that it's the concrete bank building and
vault that protect your box contents in disasters,
not individual boxes, Benore said. Vaults are
fireproof, but not waterproof. So if you're in a flood-
prone area, choose a box located high in the vault.
·A risk with a virtual safe deposit box is a computer
crash. Also, original or certified documents may be
required for certain transactions. So always have
your attorney certify several copies of legal
documents and keep those accessible.
Spouses Gail Liberman and Alan Lavine are syndicatedcolumnists. Their latest book is "Quick Steps to FinancialStability" (Que/Penguin). You can contact them atwww.moneycouple.com.
Safe Deposit Audit Questions:
Based on your current financial institutions safe deposit procedures, circle the response to the following auditquestions. Before you answer, pretend you’re in a courtroom, on the witness stand giving sworn testimony in a safedeposit lawsuit.
1) Do you have a policy and procedure manual in place and is it up-to-date? YES NO
2) Do you forbid exceptions from being made to your daily procedures? YES NO
3) Do you change tumblers and/or rotate locks on all surrendered boxes? YES NO
4) Do you forbid box holders from staying in the vault alone? YES NO
5) Is access to your guard keys restricted to authorized personnel only? YES NO
If you answered NO to any of these questions, you may want to approach a Senior Manager within your financialinstitution and discuss your policy and procedures with them. Remember, your NESDA committee is alwaysavailable to answer any questions.
How to Open a Safe-Deposit BoxBy How Personal Finance Editor
Do you have lots of valuable items lying around your
home? Using a safe-deposit box is a sure way to
safeguard your valuables and important documents.
Follow these few steps to protect your treasured
goods.
Step 1 - Select a bank with a safe-deposit box section.
Keep in mind that banks often give existing customers
discounts on box rental rates.
Step2 - Determine what size box you need. Will you be
storing only documents, or will you need a larger box for
items such as jewelry?
Step3 - Fill out and sign a safe-deposit box lease
agreement. Anyone you want to have access to the box
must also sign the agreement.
Step4 - Pick a safe, accessible place to store your
safe-deposit box keys.
Step5 - Place your valuables into the safe-deposit box.
Tips & Warnings:
* If you are the only person authorized to access the
safe-deposit box, consider giving a trusted individual the
power of attorney to access the box in the event of your
illness or death.
* Select a bank that is convenient to your work or
home.
* Do not use the safe-deposit box to store documents
you might need while the bank is closed. This includes
passports and power of attorney papers.
* The keys you receive when you lease your box are
the only keys that will open the box. If you lose the keys,
report it to the bank immediately. Most likely, you will
have to pay a locksmith to open the box and replace the
lock.
* If you do not pay the rental fees on the box, any
property in the box might be turned over to your state's
unclaimed property office.
* The contents of safe-deposit boxes are not FDIC
insured.
pg. 4, Vol. IX Issue I October/November 2008
HURRICANE IKE September 13, 2008 - Galveston, TexasSadly enough, here are some pictures of a safe deposit area shortly after Hurricane Ike hit the state of Texas. Please note that financial institutions should have a good disaster recovery policy and procedure in place for theirsafe deposit areas should New England get hit with a similar, unfortunate situation. Contact your NESDAofficial for more information. The New England Safe Deposit Association is here to help you!
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