Statutory Overview of Safe Deposit Box Laws in California
The primary regulations governing safe deposit boxes in California are found in the Financial Code of California (Sections 1500 et seq.), and under the regulations promulgated by the California Department of Financial. These regulations follow the general pattern of regulating the regular operations of safe deposit boxes held by banks, and the "lost" and "abandoned property" held at a bank that relates to the contents of safe deposit boxes.
For the most part, the Financial Code governs the basic relationship between the bank and the owner or person renting the box, and requires the bank to provide rules for how box customers may access their boxes, what information will be provided to a customer about the contents of the box when requested, the rights of the bank to open the safe deposit box, and the rights of a bank once the box has been abandoned . Persons wishing to rent a safe deposit box may be required to sign an agreement that creates a bailment of the contents of the safe deposit box. Because safe deposit box contracts are generally contractual in nature, they may be interpreted differently, or tossed out, depending on the situation. These regulations, hopefully, help to minimize the various situations that can arise for banks making claims against the deceased’s estate for lost contents over time.
Accessing Your California Safe Deposit Box
In order to access a safe deposit box in California, a person must be an authorized signer on the account. Authorized signers are usually listed in the account opening documentation and identified by signature cards. Signers can only be added and/or deleted with the consent of the person who owns the assets in the box. The deceased’s estate may authorize access. The institution may require additional documentation, such as presented in the following example:
Access to a safe deposit box is determined by the type of ownership. Individual ownership — A lease is between a bank and one person pursuant to which the tenant alone has the right to access the contents of the safe deposit box. Upon death, the box will be closed and the contents delivered to the estate upon presentation of the death certificate. Summary probate procedure — If the decedent owned a single tenancy safe deposit box, the contents will be released to any heir, without a court order, pursuant to an Affidavit of Death of Joint Tenant, provided that a copy of the death certificate and that a court file-stamped disappearance of Will (subsequent heirship order) was filed with the box’s bank. This procedure will allow an heir to obtain the contents without having to go through a formal probate proceeding. Tenancy in common ownership — A lease is between a bank and two or more people pursuant to which each co-owner may access the contents of the safe deposit box. Upon the death of one co-owner, the box remains effectively "open." The bank will continue to permit access to the box to any surviving co-owners, unless and until the survivor(s) present documentation in accordance with Part 8 of Chapter 2.5 of Division 1.5 of the California Probate Code. California Probate Code § 1512; Chart: California Safe Deposit Box Ownership Types (PDF)
Rights and Obligations Of Safe Deposit Box Holders In California
When individuals rent a safe deposit box from a financial institution in California, they are essentially leasing the box from the bank and assume certain rights and responsibilities with that agreement that are significant and important.
The Right to Access the Safe Deposit Box
Most financial institutions in California are open for business during primary banking hours Monday through Friday. At all other times of the week, it is up to the institution to decide whether to grant access to the safe deposit box holder or not. The institution has one year from the expiration of the rental period to allow access to the customer. In addition, the customer must pay any outstanding amounts owed to the institution relating to the box such as unpaid rent or legal costs before they will be allowed to access the box. The institution can also charge a reasonable fee for providing access. Upon request customers will be let into the vault to access their safe deposit box in the company of a bank employee and in the presence of another bank officer or director.
What Can Be Kept Inside the Safe Deposit Box
The bank does not require the renter to provide an inventory of the contents of the safe deposit box but does maintain general inventory forms that the renter may fill out. Therefore, there is no law against giving an accurate description of the items contained in the box so long as the description is not used for income tax purposes to evaluate the value of the items. It is important to note that these boxes are not insured for the contents by the financial institution or the federal government which is why the tenant should verify that their tenant homeowners insurance covers contents stored in a bank safe deposit box. While traditional items like jewelry, watches, handbags, photographs and beneficiaries or short-term notes are commonly kept in safe deposit boxes, items that are prohibited from being kept inside of a bank safe deposit box in California include:
What to Keep in mind Before Storing Valuable Items in a Safe Deposit Box
Even though there is no law which says that banks and financial institutions must keep the contents of safe deposit boxes insured, the FDIC recommends that the contents of safe deposit boxes should be insured as it is the responsibility of the safe deposit box holder to assume responsibility for the contents.
Absent Owners: What Happens to Unclaimed Safe Deposit Boxes in California?
In California, banks are also required to turn in unclaimed safe deposit box contents to the Administrator, just as they do unclaimed accounts. However, the time frame is slightly different. If a bank receives notice that the tenant has died or been declared incompetent, it must turn in the contents not later than 30 days after receiving the notice. In all other situations, the statute provides that they may turn in the contents only after 36 months have passed on the December 31st following the date of the last entry made in such box. For example, a bank gets a notice that a tenant died on April 1, 2019. The bank is required to turn in the box to the Department by December 31, 2022. If, however, the bank had opened the safe deposit on January 1, 2019 to conduct the required inventory of property, the box contents would have been eligible for turnover to the Department on December 31, 2021.
When the Department receives the safe deposit box, it catalogues the contents and holds them for 18 months. It is not uncommon that people come forward with the key or the box number and declare that they do not know why the box was abandoned in the first place. However, if no claim for the property is made during the 18 month holding period, the property then goes to the State’s General Fund. The problem for renters is that the Department will only verify the contents for your records after it has been turned over. When I am contacted by a renter for the vault contents, I am often met with disbelief but no less willing to spend money to find out what is in the vault. Unfortunately, the cost of the search is not recouped from the state and so the search is not something that is recommended to people who believe they have a right to the property.
This often brings up another issue. Since renters are given approximately 40 days to claim the contents of the vault after the notice is either sent to them or published, a lot of renters may assume that they have already had an opportunity to claim the property and the bank may turn the items over to the Department if they are missing. However, the statute allows the tenant to be given notice of the unclaimed property law, but not necessarily of the specific holding the bank has on that property. The search should be done as soon as possible.
Statutory Overview of Estate Planning and Safe Deposit Boxes
A safe deposit box, a small locking compartment, typically within a bank’s vault, is used to store valuables. In the event of the owner’s death, the contents of the safe deposit box may be referred to as part of the estate. Different laws apply to safe deposit boxes and their contents than for other estate property, and California’s laws differ from those of many other states. Unlike some other types of property that have value, at death the property in the safe deposit box belongs to the estate, not to the owner’s heirs or beneficiaries. The technicality of this language in California law has caused many disputes in probate court over the years, forcing surviving family members to hire legal representation. It is best to understand the plan for the safe deposit box before you need to deal with it.
California laws regarding access to the contents of safe deposit boxes after death, and before probate has begun, are found in California Probate Code sections 13101-13112. When someone dies, the person wanting access to the contents must provide a certified death certificate to the manager of the safe deposit box and ask for a list of the contents. This list may be oral or written. Only after the filing of a petition with the probate court and a court order signed by a judge can anyone remove property from the safe deposit box.
An exception exists for small banks. Under California Probate Code section 13111 , your bank can be small (not more than $5,000 in custody of the bank). If during his/her last illness or confinement, the decedent gave an authorization in writing to remove the property, and if the replacement of the property to another safe deposit box was ordered by the decedent within this period, the bank will honor the request for withdrawal. The bank will require a copy of the death certificate, if it is requested by the bank.
In addition to allowing the named authorized signer to access the property, the owner can also include in the estate plan a right of survivorship over the contents of the safe deposit box so that the remaining property passes to the named co-owner and does not become part of his estate, thus avoiding taxes and probate. (California Probate Code section13502).
It is a good idea to leave detailed instructions about the bank’s location, contents, authorized signer, and where such information can be found, for the family. However, avoid leaving a will or trust document inside the safe deposit box to avoid producing another 2-hour wait at the bank to obtain the document. The court may issue a subpoena to the bank to obtain the will.
The content of a safe deposit box can and should be discussed with the trustee having administrative power over the trust.
Steps To Access a Deceased Relative’s Safe Deposit Box In California
California safe deposit box laws are contained in California Banks and Banking Code, Section 1461. Most large multi-national banks have large vaults in which they allow customers to rent a safe deposit box. California law requires that after the person renting the box dies, if there are any items in the safe deposit box that appear to pass to another person (or persons) through a living Trust or Will, the bank must review the estate documents and turn over the contents to the named Beneficiary or his/her successors.
If the Will has not yet been filed with the Superior Court, the bank cannot ascertain that the named Beneficiary is the proper person to receive the items. In that case, California Banks and Banking Code, Section 1461 further provides that upon presentation of a certified copy of a court order from the county Superior Court that specifically authorizes the bank to release the contents of the safe deposit box to the named Beneficiary, the bank is authorized to deliver the items to the named party.
In my experience, the banks will typically require production of the following documents:
- A copy of the decedent’s death certificate
- The written court order issued under the above referenced Banks and Banking Code section (the "court order")
- A completed receipt that indicates that the bank will not be held liable for the release of the items held in the box to the wrong person.
The receipt will usually be executed by the named Beneficiary and any others who have a legal right to the items. If there are multiple beneficiaries, the bank may require that the court order appoint a person to receive the items on behalf of all beneficiaries.
It will take approximately 7 to 14 days to secure the court order. Once you have the court order, you may serve it by mail on the bank so that it has an opportunity to comply before you will need to bring the bank into an action to seek a court order to force them to comply. This basically gives the bank some time to act before they get dragged into the civil court lawsuit.
Disputing Safe Deposit Boxes in California
Many disputes can arise over safe deposit boxes, particularly in California. The usual suspect is a disagreement over who can open the box and have access to the contents. Other times, there is a quarrel between family members over whether someone owes rent to the bank for the box or from where the box was opened. When clients come to me with disagreements over a safe deposit box, the analysis begins with the statute because, as with most litigation, the law really does dictate the outcome. A good rule of thumb is that the law does not care about fair or even what I might think is "right." It may seem unfair or even harsh, but the statute will apply nonetheless.
California Civil Code § 1485 governs the disposition of safe deposit boxes. It requires banks to make a record of the lessor or lessee of a safe deposit box and the names of any persons authorized to access the box. (Cal. Civ. Code § 1485(c).) Owners of the box must be either individuals or business entities. (Cal. Civ. Code § 1485.3.) The statute also puts limitations on who is considered the lawful owner of the box and, thus, who may access it, regardless of the rights of others. In other words, you can have full rights to the contents of the box, but if you are not on the lease, you cannot access it without the owner present. (Cal. Civ. Code § 1485(c) ("Any authorized person shall have rights of access to the safe-deposit box at any time when accompanied by the lessor or lessee, or his or her duly authorized agent.").)
Paradoxically, however, under California’s Adams Deposit Account Law, a bank can accept deposits from somebody who walks in off the street, without first knowing if they have any right to the deposit made. So , if you walked into a bank, identified yourself with your COLA ID, and asked the teller to transfer funds from your mother’s account to your account, you will be able to do so. (Cal. Fin. Code § 17205(a) (a bank may pay withdrawal requests made by any person with proof of identity acceptable to the bank, including identification issued by the state and federal government).) However, this does not authorize creditors of the estate to withdraw funds from the account without a court order. (See, e.g., Reyes v. Bank of America, N.A. (2015) 239 Cal.App.4th 356.)
There are times when the bank must allow a party to access the safe deposit box despite not being on the lease. This is the case with a certified copy of a court order, a death certificate, or an affidavit of death. California Civil Code § 1485.4 governs which entities can open a safe deposit box in the absence of the owner or a court order. Those entities include:
California law may also be in conflict with the policies of the bank itself. For instance, Bank of America’s policy requires two signatures to open a safe deposit box, but the Civil Code only requires one signature. (Compare Bank of America, Safe Deposit Box Rules, No. R14 (2 signatures required to open and close a box) with Cal. Civ. Code § 1485(c) & (d) (only one owner required to open box).) This means that even if all parties are okay with opening the box despite the non-compliance with the bank’s internal policies, the bank might not allow it. Rather, it would be issued a breach of contract claim by the person not allowed to open the box. To maximize your odds of success, it is best to know what the bank’s internal rules are and comply with them.