NESDA NewsletterVol. IX Issue I October/November 2008

Serving New England’s Financial Institutions since 1917

Wednesday, November 19, 2008

Benjamin’s Restaurant, Taunton, MA

‘Deal or No Deal’ Safe Deposit Style

Wednesday, March 18, 2009

Holiday Inn Select, Woburn, MA

33 New England Educational Conferencerd

Wednesday, May 20, 2009

Danversport Yacht Club, Danvers, MA

Annual Meeting/Past Presidents’ Night

‘Legal Night’

Make your reservation today by calling (781)438-9400,

X126 or by email at wtoth@stonesav.com

N.E.S.D.A.’s President’s for 2008/09Eastern Massachusetts Region

Amy Briggs

Bristol County Savings Bank

508-824-4084

Western Massachusetts Chapter

Linda Gouvin

Country Bank

413-277-2108

NESDA disclaims any responsibility for statements, opinions,

and/or advice expressed in this newsletter.

Financial Institutions should always adhere to their own Policy

and Procedure manual, as well as consult their Legal

Department. Comments and questions should be

addressed to the NESDA’s Editor.

W. Toth, NESDA Editor

c/o Stoneham Savings Bank

359 Main Street

Stoneham, MA 02180

“I awoke this morning with devout thanksgiving for my friends, the

old and the new.”

Ralph Waldo Emerson (1803 - 1882)

pg. 2, Vol. IX Issue I October/November 2008

CONSUMER BANKING:

A safe deposit box is not the best place tostash cashBy Gail Liberman and Alan Lavine

PALM BEACH GARDENS, Fla. (MarketWatch) --

Better think twice about storing cash in a bank safe-deposit

box, because it's not as safe as you might think.

Contents of safe-deposit boxes can be destroyed, as they

were during the W orld Trade Center attack. Hurricane

Katrina wiped out some 250 vaults, said Margot Mohsberg,

spokeswoman for the American Bankers Association.

Unless you've confirmed that your homeowners insurance

policy covers the contents, "nothing in that safe deposit box

is insured," said David McGuinn, president of Safe Deposit

Specialists in Houston. And, he said, "Your homeowners

insurance policy won't insure cash, either."

But due to the global financial crisis, more people might see

safe-deposit boxes as a way to keep their cash safe.

McGuinn said he fears that's exactly what may be

happening as more bank accounts are closed during this

economic meltdown.

There's some evidence that even before the current crisis

savers were stashing cash in bank safe deposit boxes.

About three years ago, a Pennsylvania Department of

Revenue survey of 687 safe deposit boxes found that 172

had "cash or coins." However, McGuinn says the latest

economic news may be moving more to use bank safe

deposit boxes for liquidated cash.

The FDIC, which covers deposits at federally insured

financial institutions if they fail, does not cover contents of

bank safe deposit boxes. The contents are property of the

consumer, not the bank. If a bank fails, box renters

generally have immediate access, or if a bank is closed, will

likely find a notice on the front door with a contact number,

McGuinn said.

"Every safe deposit box contract I've seen specifically

excludes cash from being in a safe deposit box," says

Joseph Oliva, attorney with Sedgwick, Detert, Moran &

Arnold LLP, in New York. Oliva, who has investigated

claims on bank fidelity bonds, says courts have upheld

those contracts.

There are other issues to consider with a bank safe deposit

box:

·The U.S. Department of Homeland Security can

access your safe deposit box if a bank files a

suspicious activity report, McGuinn said. However,

a court order is required.

·The IRS can freeze assets, effectively placing a

hold on your safe deposit box until a dispute is

resolved.

·Heirs could face hassles if a safe deposit box

owner dies. Pennsylvania, for example, requires a

bank employee, an estate attorney or a revenue

department employee to inventory safe deposit

boxes before most contents can be removed.

"Most state laws will allow the surviving lessee, if

there is one, to access the box after a death,"

Mohsberg said. "Many states rely on the lease

contract to cover access rights."

Nevertheless, safe deposit boxes remain an attractive place

to store valuables and copies of certain documents.

Fewer boxes available

Available boxes, though, may get tougher to find. New bank

branch construction has declined in the last year and the

average number of boxes being purchased is trending

downward, said Randy Benore, director of product

management and planning for Diebold Inc., in North

Canton, Ohio. On the other hand, more credit unions offer

them as a service.

New bank vaults have up to 30% fewer safe deposit boxes

compared with about 10 years ago, Benore said.

Cost to rent a small box averages just $25 annually,

according to the American Bankers Association. Some

banks offer discounts to existing customers.

Virtual safe deposit boxes are another option for storing

important documents. For example, W ells Fargo Bank's

"vSafe" provides online access to electronic copies. W hile

its cheapest safe deposit box averages $30 annually, one

gigabyte of online space costs $4.95 monthly, or about $60

a year.

What to do

If you are using any type of bank safe deposit box, consider

these issues:

·Be sure your homeowners insurance covers safe

deposit box valuables, even if it means paying an

added premium.

·Put valuable contents in sealed plastic bags and

photograph them. Also, get appraisals of valuables

and keep receipts. Although banks typically are not

liable for contents lost in a disaster or terrorist

attack, they often try to work with customers, Oliva

said.

·Make sure your heirs know you have a safe deposit

box. Otherwise, when you die, contents could

revert to the state.

·Be very specific about safe deposit box access in

your power of attorney documents.

·Avoid storing in the box original documents you

might need to access immediately, such as a

power of attorney, passports, medical-care

pg. 3, Vol. IX Issue I October/November 2008

· directives, funeral instructions and, depending upon

your state, a will.

·Read the contract for your box carefully. Also,

Mohsberg suggests, appoint two lessees to ensure

accessibility.

·Understand that it's the concrete bank building and

vault that protect your box contents in disasters,

not individual boxes, Benore said. Vaults are

fireproof, but not waterproof. So if you're in a flood-

prone area, choose a box located high in the vault.

·A risk with a virtual safe deposit box is a computer

crash. Also, original or certified documents may be

required for certain transactions. So always have

your attorney certify several copies of legal

documents and keep those accessible.

Spouses Gail Liberman and Alan Lavine are syndicatedcolumnists. Their latest book is "Quick Steps to FinancialStability" (Que/Penguin). You can contact them atwww.moneycouple.com.

Safe Deposit Audit Questions:

Based on your current financial institutions safe deposit procedures, circle the response to the following auditquestions. Before you answer, pretend you’re in a courtroom, on the witness stand giving sworn testimony in a safedeposit lawsuit.

1) Do you have a policy and procedure manual in place and is it up-to-date? YES NO

2) Do you forbid exceptions from being made to your daily procedures? YES NO

3) Do you change tumblers and/or rotate locks on all surrendered boxes? YES NO

4) Do you forbid box holders from staying in the vault alone? YES NO

5) Is access to your guard keys restricted to authorized personnel only? YES NO

If you answered NO to any of these questions, you may want to approach a Senior Manager within your financialinstitution and discuss your policy and procedures with them. Remember, your NESDA committee is alwaysavailable to answer any questions.

How to Open a Safe-Deposit BoxBy How Personal Finance Editor

Do you have lots of valuable items lying around your

home? Using a safe-deposit box is a sure way to

safeguard your valuables and important documents.

Follow these few steps to protect your treasured

goods.

Step 1 - Select a bank with a safe-deposit box section.

Keep in mind that banks often give existing customers

discounts on box rental rates.

Step2 - Determine what size box you need. Will you be

storing only documents, or will you need a larger box for

items such as jewelry?

Step3 - Fill out and sign a safe-deposit box lease

agreement. Anyone you want to have access to the box

must also sign the agreement.

Step4 - Pick a safe, accessible place to store your

safe-deposit box keys.

Step5 - Place your valuables into the safe-deposit box.

Tips & Warnings:

* If you are the only person authorized to access the

safe-deposit box, consider giving a trusted individual the

power of attorney to access the box in the event of your

illness or death.

* Select a bank that is convenient to your work or

home.

* Do not use the safe-deposit box to store documents

you might need while the bank is closed. This includes

passports and power of attorney papers.

* The keys you receive when you lease your box are

the only keys that will open the box. If you lose the keys,

report it to the bank immediately. Most likely, you will

have to pay a locksmith to open the box and replace the

lock.

* If you do not pay the rental fees on the box, any

property in the box might be turned over to your state's

unclaimed property office.

* The contents of safe-deposit boxes are not FDIC

insured.

pg. 4, Vol. IX Issue I October/November 2008

HURRICANE IKE September 13, 2008 - Galveston, TexasSadly enough, here are some pictures of a safe deposit area shortly after Hurricane Ike hit the state of Texas. Please note that financial institutions should have a good disaster recovery policy and procedure in place for theirsafe deposit areas should New England get hit with a similar, unfortunate situation. Contact your NESDAofficial for more information. The New England Safe Deposit Association is here to help you!