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Tuesday, December 15, 2009

Safe? Deposit Boxes

“Ah, this is obviously some strange usage of the word 'safe' that I wasn't previously aware of”- Douglas Adams (British Writer, 1952-2001)

We all have important papers that we want preserved; life insurance, house title, car title, birth certificates, and so on. Losing these in a house fire just makes your loss and burdens even worse. So for generations, the advice of planners and preparers has been to keep your important papers off-property in a bank’s safe deposit box. But not anymore…

Many states, like California, are desperate to find money to pay for bloated budgets and they have discovered that unclaimed public property is a great revenue source. According to an ABC investigation, How Safe Is Your Safe-Deposit Box?, the California courts have issued injunctions barring the state from seizing any more property (like safe deposit boxes) until it made reforms. In a conflict of interest, California has changed the “no contact” period that triggers seizure from 15 years to 7, then to 5 and currently 3. (They even tried to reduce the waiting period to a single year.) On top of this, the state had not bothered to inform anyone that your safe deposit box is about to be taken by the state and IMMEDIATELY auctioned off or destroyed. It stopped sending notices to rightful owners because, "It could well result in additional claims of monies that would otherwise flow into the general fund."

Read the full story of How Safe Is Your Safe-Deposit Box? for tales of lost stocks, land rights, and valuable heirlooms. Family fortunes sold for a pittance at auctions to feed the state general fund.

Bottom Line

How do you protect yourself?

  1. Make contact with your bank, your brokerage firm, etc. at least once a year, in a way that creates a paper trail. Make sure they have your current address.
  2. If you own stock, occasionally vote your proxies or take other steps to keep your stock ownership active. Stay in touch with your broker or brokerage company.
  3. Write a list of all your accounts and keep it with your will, so your heirs will know where to look.
  4. Consider insuring valuables even if you keep them in your safe-deposit box. That way, you're covered financially if the bank or state makes a mistake and empties your box. Plus, safe-deposit contents have been known to be destroyed by fire or flooding.

If you want to search for unclaimed property in your name, check out the following links for more information:

National Association of Unclaimed Property Administrators

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