The Common Misunderstanding About Safe Deposit Boxes in Nebraska

Introduction

There is a prevalent misunderstanding surrounding the ownership of safe deposit boxes in Nebraska. Many people, including lawyers, incorrectly believe that when two individuals share a safe deposit box, the surviving individual automatically inherits the contents of the box upon the other's death. There are many misconceptions surrounding safe deposit boxes, and it is important to understand the critical distinction between co-renting and co-ownership.

The Misconception About Safe Deposit Boxes

A safe deposit box is a secured container typically stored in the vault of a bank or credit union. People rent these boxes to keep valuables and essential documents safe from theft, fire, and other potential disasters. Contrary to popular belief, a safe deposit box is not the same as jointly owned property. Instead, it is a leased space, similar to an apartment rental. The misunderstanding arises because many bank tellers and professionals incorrectly assume that the contents of a safe deposit box belong to the surviving co-renter upon the death of the other renter.

Co-renters vs. Co-owners

The Nebraska Supreme Court has described a safe deposit box with two parties named as "leased jointly." (Ford v. Jordan, 220 Neb. 492, 495 (1985) and In Re Estate of Steppuhn, 221 Neb. 329, 330 (1985)) Nebraska statutes also refer to a safe deposit box as being "rented." (Neb. Rev. Stat. §8-1404; Neb. Rev. Stat. § 30-4031; Neb. Rev. Stat. §69-1307.06) The terms "leased" and "rented" are used interchangeably, but the safe deposit box is not described as being "owned." This distinction is crucial, as it clarifies that a safe deposit box is different from a deposit account. In a jointly owned bank account, the second person automatically becomes the sole owner after the death of the first. Since the safe deposit box is only leased and not owned, the death of the first renter cannot impact ownership of the contents in the box.

Consider a simple analogy: two friends rent an apartment together. Each has their own separate bedroom and living space. They share some items, while other items belong solely to the purchaser. When the first roommate dies, the second roommate does not automatically own the first roommate's property.

Potential Issues in Estate Planning

The misunderstanding of safe deposit box ownership can lead to complications in estate planning and administration. It is not uncommon for people to store critical documents, such as wills, trust agreements, and insurance policies, inside a safe deposit box. If bank employees wrongly assume that the surviving co-renter automatically inherits the contents of the box, they may inadvertently release these documents or other valuable assets to the wrong person.

Is it a gift?

One additional issue that may arise is whether placing an item into a jointly leased safe deposit box is intended to be a gift. In Nebraska, to make a gift, the law requires intent to make a gift, delivery of the gift, and acceptance of the gift.

Imagine a scenario: a father places several gold bars in his safe deposit box. One day his son visits, and they have an emotional conversation. The father gives his son a key and says he wants the son to have the gold bars in the safe deposit box. This situation would likely be considered a gift of the gold bars. However, if the father says nothing and the son discovers the gold bars after his father's death it is likely not a gift. In both circumstances the bank is likely to release the contents of the safe deposit box to the son and his siblings probably won’t be very happy about it.

Was Joint Ownership Intended?

Placing an item into a safe deposit box itself does not create joint ownership. When two parties own a property together, the law presumes that they own the property as "tenants in common." To create "joint tenancy with rights of survivorship," the facts and circumstances need to overcome the presumption of tenancy in common.

Since a safe deposit box is a lease, placing an item into the box without any other facts will not be sufficient to overcome the presumption of tenancy in common. Imagine the father hands the son the key and says there are gold bars in the safe deposit box and the son can sell some to pay his bills. The father also tells the son he wants the son to have the gold bars when he dies. This situation might create joint tenancy with rights of survivorship in the gold bars because it shows an intent by the father that the son has a present ownership interest in the bars. Now imagine there are silver bars in the safe deposit box. Is there joint tenancy in the silver bars? Again, the son's siblings probably won't think so!

To avoid such complications, it is essential to have a clear understanding of safe deposit box regulations in Nebraska and ensure that estate planning documents accurately reflect the ownership and intended distribution of the box's contents. Safe deposit boxes are often used as “cheap estate planning” without clients knowing the consequences. It’s always best to ask a lawyer.

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