Monday, April 11, 2011

Why Safe Deposit Boxes Aren't Safe In These Times

Have you ever wondered why the IRS allows a tax deduction for using a bank's safe deposit box? In these hard economic times, there are multiple valid reasons not to trust your bank to keep your valuables in its safe deposit vault.  History tells the story time and time again of the state seizing safe deposit boxes without due process of law especially during hard economic times.

In 2008, 50 U.S. States were holding $32 billion worth of unclaimed property that was used to balance their budgets.  In some cases, "unclaimed" meant the owner simply hadn't contacted the bank in some time over the contents of their safe deposit box.
"As reported by ABC News in 2008, what started out as a program to hold unclaimed property, such as the contents of safety deposit boxes owned by people who have moved away without a forwarding address, has gone wildly out of control. The program is using the flimsiest of excuses to drill safe deposit boxes and sell the contents. 

In a case reminiscent of the Monty Python organ donor skit (or perhaps the movie Repo Men), a San Francisco woman’s jewelry appraised at over $80,000 was sold even though she lived a few blocks from her bank, had not moved, and was current on all of her box rental feeds. In another case, a man’s retirement savings consisting of $4 million of stock certificates were sold; and “A Sacramento family lost out on railroad land rights their ancestors had owned for generations”. Ludwig von Mises Institute - Mises Economics Blog 
All this was happening around the economic upheaval in 2008.  According to the blog article, looting safe deposit boxes required less due process than asset forfeiture.  Attorney Bill Palmer, who represented countless citizens in a class action lawsuit against the state of California, explained:
 "They figured the safe deposit box was safer than keeping it under the mattress," Palmer said. "In the case of a lot of citizens, they were wrong, weren't they?" 
California law used to say property was unclaimed if the rightful owner had no contact with the business for 15 years. But during various state budget crises, the waiting period was reduced to seven years, and then five, and then three. Legislators even tried for one year. Why? Because the state wanted to use that free money. (Blogger note:  You mean wanted to steal their money!)
"That's absolutely correct," said California State Controller John Chiang, who inherited the situation when he came into office. "What we've done here over the last two decades has been dead wrong. We've kept the property and not provided owners with the opportunities -- the best opportunities -- to get their property back." - Not-So-Safe-Deposit Boxes: States Seize Citizen's Property to Balance their Budgets - - 2008
In other words, Mr. Chiang admitted the State of California had been stealing money from its citizens. How can you trust the government after this kind of unjustified action?  How can you trust its courts?  I for one certainly can't trust the government any longer, clearly a criminal syndicate that thinks nothing of manipulating the law to steal from its citizens. 

San Francisco resident Carla Ruff's safe-deposit box was drilled, seized, and turned over to the state of California, marked "owner unknown."  The lady previously described as having her safe deposit contents stolen in San Francisco explained:

"I was appalled," Ruff said. "I felt violated."

Unknown? Carla's name was right on documents in the box at the Noe Valley Bank of America location. So was her address -- a house about six blocks from the bank. Carla had a checking account at the bank, too -- still does -- and receives regular statements. Plus, she has receipts showing she's the kind of person who paid her box rental fee. And yet, she says nobody ever notified her.

"They are zealously uncovering accounts that are not unclaimed," Ruff said.- Not-So-Safe-Deposit Boxes: States Seize Citizen's Property to Balance their Budgets - - 2008
So if you think your valuables are safe in a deposit box, think again.  If you always worried about how safe your valuables were, you weren't being paranoid.  California had already spent $5.1 billion dollars of people's safe deposit boxes prior to the 2008 lawsuit and spent all the money like a crack whore.  Back during the Great Depression, Franklin D. Roosevelt stole gold out of people's safe deposit boxes, NAZI's seized money and gold from Jew's banks, etc.  If there's some national emergency imagine the state and banks would be drooling over keeping your items and locking you out of their bank should it become insolvent.

After the class action, California law has since changed but when times get tougher one may want to consider how despicable banks and the government can be.  Imagine the audacity a state government would have to have to steal money from safe deposit boxes?  Do they really think people would simply abandon their valuables?  They knew what they were doing!  The California state legislature had changed the laws to trick people into thinking they didn't have to contact their banks for years over their property since the old standard was 15 years to claim unclaimed property.  This was absolute criminal among these politician law makers! Did they get put in jail for it?  No, of course not.

Here's some tips on how to avoid the fiasco if at all possible:

  • Make contact with your bank, your brokerage firm, etc. at least once a year, in a way that creates a paper trail. Make sure they have your current address.
  • If you own stock, occasionally vote your proxies or take other steps to keep your stock ownership active. Stay in touch with your broker.
  • Write a list of all your accounts and keep it with your will, so your heirs will know where to look.
  • Consider insuring valuables even if you keep them in your safe-deposit box. That way, you're covered financially if the bank or state makes a mistake and empties your box. Plus, safe-deposit contents have been known to be destroyed by fire or flooding.
  • If you want to search for unclaimed property in your name, you do not need to pay other people to do it for you. Check out the following links for more information:

National Association of Unclaimed Property Administrators