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Is there anything that would prohibit a trust from having a safe deposit box?
Answer by John Burnett, Dave McGuinn and Ken Golliher, BOL Gurus,
Guru Bios

Question: Is there anything that would prohibit a trust from having a safe deposit box? If not, what sort of extra liabilities or problems, if any, would there be that we should watch out for?

Answer by John Burnett:
I can see no reason for not permitting a trust to lease a safe deposit box. As for problems, you get the same problems you get with any relationship with a trust --
  • frequent reluctance on the part of the trustees to provide trust documentation
  • the inevitable successor trustee and how to document his/her authority
  • knowing whether co-trustees must act together or may act separately
  • Others

Answer by Dave McGuinn:
There are many types of Trust documents. If this question relates to a "Living Trust", there could be a problem.

Most safe deposit state regulations do not address Living Trusts at all. They only talk about Wills, court appointed estate representatives, Executors, Will searches, small estate affidavits, etc.

A Living Trust could be a document as simple as a "file in the blank" form purchased at a local office supple store. This form does not have a judge's signature or a court seal. These forms can create significant liability on your institution if you let someone in a box after a renter's death.

I strongly recommend that your institution's legal counsel help you write your own internal procedures for accepting any type of Trust document that is not issued by the court.

Answer by Ken Golliher:
Renting a safe deposit box to a trust is analogous to renting to any other type of entity; e.g., a corporation, a governmental unit etc; it is not a distinctly different set of considerations. Your requirements for documentation should be approved by your institution's counsel and adhered to by your personnel.

Establishing those documentary requirements involves a number of considerations, but they are virtually identical to your considerations in loaning money or opening a deposit account for a trust. You are contracting with an entity, not a person. Establishing the existence of the entity and any signatory's authority to act on behalf of the entity are the focal points of your responsibilities.

It's important to understand the customer's motivations: trusts are established for a variety of purposes which include minimizing the federal estate tax and avoiding the probate process. The trust may be revocable or irrevocable. However, one common thread is that, in order to be controlled by the terms of the trust, the property must be transferred to the trust. If the customer has time deposits and stock certificates, aka "certificated property," transferring them to the trust is relatively easy. However, what about valuable jewelry, coin collections, heirlooms, etc.? They can only be transferred by delivery to the trustee. The primary method for proving that delivery took place is to open a safe deposit box in the name of the trust and to place the valuables in the box. Attorneys drafting estate plans routinely advise their clients to open a safe deposit box in the name of the trust and place the "uncertificated" property in the box.

In summary, it is normally your most sophisticated customers who want to open a safe deposit box in the name of a trust. Depending on its own terms, a trust may be able to rent everything from a safe deposit box to Yankee stadium. If you refuse based on lore or a lack of comfort with the medium, they will find another institution with a better understanding of the considerations - they have no choice. While the loss of a single safe deposit rental may not prompt concern, a safe deposit relationship is a core contact - if they have to move that, they might as well move everything else.



First published on BankersOnline.com 1/20/03









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