How Safe are Safe Deposit Boxes?

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

I have routinely recommended that people use a bank safe deposit box to store valuable papers and small assets. These include documents like wills, trust documents, ethical wills, and unrecorded deeds. Valuable assets include diamonds, gemstones, jewelry, bullion, and small collectables like rare coins, stamps, and trading cards.

The physical protection of a bank vault, plus a system of access requiring two keys kept by the customer and the bank, would seem to provide a great deal of security. Yet several recent news articles suggest safe deposit boxes are not as safe as they seem.

An article in the New York Times reported 44 robberies in the last five years related to safe deposit boxes. Even worse were numerous bank errors in which boxes were moved, misplaced, drilled open, or closed by mistake. A large Maryland bank closed several branches and lost hundreds of safe deposit boxes. One customer lost $500,000 worth of gold and gems.

In each case, banks vigorously fought any requirement to make their customers whole. Even more shocking, no provision of federal banking law regulates safe deposit boxes.