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Can a safe deposit contract have a POD clause?

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Question: 
Can a bank use or allow a POD on a safe deposit contract?
Answer: 

Using a POD agreement on your safe deposit rental lease can create liability for your financial institution. This liability occurs when you deliver box contents to the person named in the POD clause and then another relative claims to be an owner of these contents.

One unfortunate bank recently shared this horror story with me. They delivered box contents to a surviving daughter after the renter died, as instructed in their POD clause. The deceased renter's stepson then made a claim for his father's assets. The stepson sued the bank and in a courtroom the POD clause was declared illegal. The court said that the bank could not make an estate document out of a safe deposit rental lease.

In the 45 states where I present legal seminars, Iowa is the only state with a state banking regulation that allows a Beneficiary (or POD) to be added to a lease agreement.

First published on BankersOnline.com 8/05/02

First published on 08/05/2002

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