# Estate Planning: Safety Deposit Box



## birdman (Feb 12, 2013)

As the years move on I have decided to review our estate planning including an update of our will, power of attorney, representation agreement etc. We have 2 grown responsible children who we propose to make them joint executors of our estate. There are no problems within the family unit. In any event, I was thinking of opening a safety deposit box in the names of our 2 children with 2 signatures required for access. They would in turn appoint me as their attorney to enter the box on my own. By doing this it would allow me access and when either myself or my wife die our children would have easy access to the box. This would eliminate the need for the box to be listed and the contents included in my (or my wifes) estate. Just wondered if anyone had any thoughts on this? Thanks.


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## OhGreatGuru (May 24, 2009)

a) Ask your bank whether they even have "2 signature needing access" boxes. I doubt it.
b) I don't think a POA will give you access.
c) Based on the experience of a widow friend of his, my father always advised me "empty out the safe deposit box first, then tell the bank I am dead." In order to protect their liability, banks have been known to freeze safe deposit boxes until the executor produces a probated will. This can be difficult if the estate papers are in the SDB, and can result in months of delay in settling the estate. 
d) You mention your wife is still living; how is she supposed to get access if you die first?
e) I'm not convinced you would have to list a safe deposit box & its contents in a will, but that may depend on the nature of the contents. - If it is estate papers such as your will and insurance policies, your executors will want access immediately;
- If it is personal property of relatively minor value, you only need a clause in your will permitting your executors to divide personal property as they see fit. Where it is located is immaterial, and it doesn't need to be declared in probate.
- If it is negotiable securities in your name, your executors will want to have access to convert them to the estate, unless they are owned JWROS. They will be obligated to report the assets for probate. Frankly I think your executors will want to get their hands on them before the bank obstructs them.
- If it unusually valuable items of personal property you should probably list them in the will.

I would suggest a simple joint safe deposit box with yourself, your spouse, and your 2 children. If you can't trust them with unrestricted access; or trust them to divide the contents fairly, they probably shouldn't be your executors.


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## birdman (Feb 12, 2013)

Thanks for the response and comments. Maybe I thinking about it too much. As a matter of interest I know you can make it two signatures to enter the box and can also do the attorney thing back to myself to enter alone. If I predeceased my wife the kids could simply appoint her as the attorney. I also know from experience that in a joint box with my wife with either to enter that upon the death of one the box is frozen but they do allow you to take out the will. Then the box is listed by the bank in front of the executors and the contents are sealed until probate. As we get older I will want to consider transferring most of my assets to the kids in order to reduce probate fees but we will see as time and things progress. I do keep some items of fairly significant value in the box which I would prefer to not have to go to probate.
Your final comment makes a lot of sense and is a viable option, however, after my wife and I are gone I somehow feel it only proper that it would take the signatures of both children to enter the box. Again, thank you for your input and ideas.


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## Eclectic12 (Oct 20, 2010)

frase said:


> ... As a matter of interest I know you can make it two signatures to enter the box and can also do the attorney thing back to myself to enter alone.


Is this a lawyer drawn up POA or the financial institution's version? 

I ask because my mom was given her brother's lawyer drawn up POA to access his safety deposit box to do some business for him while in hospital. The financial institution said the lawyer drawn up POA would have to be sent to head office for review by their lawyers, with a turnaround time of five weeks. The recommendation for faster access was to have him sign the financial institution's POA.

Fortunately, while they debated what to do - a sharp eyed clerk overhead my sister's name, put two and two together to point out that my sister's name was still on the deposit box, from the summer she lived with my uncle. My sister could get in right away.


Cheers


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## kcowan (Jul 1, 2010)

My brother and I had no problem accessing our Dad's safe deposit box at TD even though it was in his name only. We got the original will out. Once probated, we could access it freely after the contents were listed by the bank.


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## Eclectic12 (Oct 20, 2010)

^^^^^

I suspect removing the will & leaving the contents until probate clears is treated differently than removing some of the contents.
That might explain why the access was different. 

Cheers


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## birdman (Feb 12, 2013)

Everyone is on the right track on this and yes, after the owner of the box is deceased the family can enter it with the bank and remove ONLY the will. Sometime after this the executors list the box with the bank and the contents are included in the assets of the estate until probate. After probate the contents can be released to the executors. In regards to power of attorney for the box, Banks traditionally require their own form. When I was in the business years ago the owners of the box simply appointed an agent and another bank calls this a "deputy" and others I believe call it an attorney. When I called the Bank they said 2 signatures would still be required which seemed like nonsense to me. I called a large local branch of the same bank and they said sure, the 2 owners of the box (would me my 2 children) simply appoint me as an attorney. It seems the branch staff may need some more training. 
Perhaps I giving this whole thing too much thought but it seems like a good idea to me. Thanks everyone for there comments.


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## OhGreatGuru (May 24, 2009)

Using a POA for parent to get around the problem of bank freezing SDB if parent dies is an interesting dodge - I must make note of this for future reference. 

Regarding bank allowing access to will, and possibly nothing else. I have heard this can be done. But there may be many things in an SDB for which you don't want to wait for probate, nor should you have to ask permission of some bank official to take out:
Life insurance policy -these pass outside of the estate, and beneficiary (ies) should not have to wait for probate;
JWROS securities - these pass outside of estate, and survivor will want to get the paperwork started to transfer ownership;
GIC's & Canada Savings Bonds, unless they are JWROS, are generally paid out to estate, and don't need to await probate. Executors shouldn't wait for probate to liquidate these;
Personal effects, property, or documents not belonging to the deceased, but to survivors;
Documents such as marriage certificates, birth certificates; passports. In the case of deceased some of these may have to be returned to government; in the case of survivors they may be required in applying for survivor's benefits.

The list can be endless.


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## birdman (Feb 12, 2013)

OhGreatGuro that was my thinking exactly. I believe Life insurance policies may also be able to be taken out at the same time as the will but am not sure. Yes, the list is endless-gold bullion, cash, jewellry, etc. Actually right now I am holding in our box a few important papers belonging to the kids - just for safekeeping.


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## kcowan (Jul 1, 2010)

Life insurance and securities require a death certificate, not original copies, in my experience. Certificates do but they continue to earn money during probate. And that money accrues to the estate.

Ontario savings certificates actually require their form signed by the executor to be notarized before releasing the funds. That was the toughest of all.


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## fraser (May 15, 2010)

POA's terminate on death.

Our experience on the death has been that the bank does nothing until they get a death certificate. Once they get the death certificate the deceased's safety deposit box cannot be accessed by those who have also have a key and permission. The bank froze the safety deposit box but opened it in our presence (sister and I) in order to complete an inventory of the contents. 

The bank also froze the bank accounts (we were told routine on all accounts over 10K) until such time as we produced a Grant of Probate. The bank told us that they insist on Grant of Probate in order to protect themselves from litigation.

We actually moved some monies around and accessed the safety deposit box in between the actual time of death and the issuance of the death certificate. 

Depending on your province of residence, it is a very good idea to consider the tax and administrative issues surrounding probate. 
Failure to organize your affairs could result in the payment of probate taxes. BC and Ontario are brutal from a probate tax perspective.


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## Xoron (Jun 22, 2010)

fraser said:


> BC and Ontario are brutal from a probate tax perspective.


A bit off topic: 

One interesting thing that a coworker was cautioned about from their lawyer when drafting new wills. If you're going to leave something to charities in your will, be sure to designate a specific asset, or $ amount and not a % of your estate. Most charities will drag the executors through hell and back verifying the value of ever single thing in the state so they can maximize the % that they end up with.


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## dattars (May 21, 2013)

RBC allows up to 3 people to have signing authority on a safety deposit box. Before losing my father, I had joint signing authority with my parents and the box contained an itemized list of all its contents along with who the beneficiary of each item was, we are now in the process of replacing my father's signing authority with my sister. 

To prevent having to redraft the will every time you add something to the safety deposit box or want to change a beneficiary our lawyer has suggested adding a clause to my mother's will stating that the contents of the safety deposit box will be divided according to the instructions contained in the box, and the list be notarized ($20 to notarize vs $500 for a new will) and kept in the box.

Emptying the box before telling the bank that the account holder has passed is definitely the easiest way to avoid probate and the list ensures that the contents goes to the appropriate parties (not sure how airtight this method is legally but it works well for us).


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## sags (May 15, 2010)

The death certificate has the date of death on it, and the bank did check my dad's account for any activity after his death.

I don't think the CRA or estate debt holders would be happy with an arrangement where people took assets out of the estate.

It is the executor's duty to secure the estate immediately after death, so they might be put in a bad situation if people start helping themselves to assets. They could be held legally responsible.

It is my understanding also, that beneficiaries aren't entitled to anything until after all estate debts are paid, and the executor can't legally distribute anything until after a time limit has passed.

Another note............insurance policies to a named beneficiary are paid out to the beneficiary immediately..........but if they name the estate as the beneficiary, the money has to be put into the estate account where it will sit with all the other money.


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## Eclectic12 (Oct 20, 2010)

sags said:


> Another note............insurance policies to a named beneficiary are paid out to the beneficiary immediately..........but if they name the estate as the beneficiary, the money has to be put into the estate account where it will sit with all the other money.


 ... and I believe that when the policy is paid to the estate, that's likely going to make it taxable whereas to the named beneficiary, it isn't.


Cheers


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## kcowan (Jul 1, 2010)

Eclectic12 said:


> ... and I believe that when the policy is paid to the estate, that's likely going to make it taxable whereas to the named beneficiary, it isn't.


It makes it subject to probate fees. I guess you could call that a tax but it is not very much. The disbursements will be taxable irrespective of whether they are subject to probate or not. So many people go out of their way to avoid probate fees. It is much less than GST. It is comparable to the land transfer tax when buying a house (at least in BC).

We tried to avoid it when MIL died (and failed). But it was not a big deal.


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## Eclectic12 (Oct 20, 2010)

kcowan said:


> It makes it subject to probate fees. I guess you could call that a tax but it is not very much...
> So many people go out of their way to avoid probate fees. It is much less than GST.


After paying taxes for a lifetime, as long as the policy holder trusts the money savvy of the named beneficiary, why would they want to pay more taxes?




kcowan said:


> The disbursements will be taxable irrespective of whether they are subject to probate or not.


You'll have to explain what tax the life insurance proceeds are subject to. 

CRA says most amounts paid are tax free ...
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/nttxd-eng.html

and SunLife says the exceptions are:
1) a policy that has investment growth that exceeds (named non-exempt). Though they do note that only the excess amount is taxable, not the full amount.
They also note that virtually all policies issued in Canada at the time of the writing are designed to avoid becoming non-exempt.

and

2) a policy registered as an RRSP.


https://www.sunnet.sunlife.com/file...adian_taxation_of_life_insurance_policies.pdf



Cheers


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## OhGreatGuru (May 24, 2009)

sags said:


> ...
> 
> 1) It is the executor's duty to secure the estate immediately after death, so they might be put in a bad situation if people start helping themselves to assets. They could be held legally responsible.
> 
> ...


1) That is the correct legal position. But in the original post, the two children of the OP are also the executors. This is common in a simple family estate where the adult children are the executors. The bank is actually preventing the executors from doing their job, in order to cover their own liability. 

2) No, executors can make partial distributions at their discretion. A lawyer or trust company would probably sit on all the money rather than give "Dear Aunt Gertrude" her token $10,000 right away out of a $1M estate, but us common folk are allowed to exercise common sense. What is true is that the executors are potentially liable, and good sense requires that they not distribute all of the estate untill all the debts are paid. This can take quite a while, as getting final income tax clearance can take a long time.


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## kcowan (Jul 1, 2010)

Eclectic12 said:


> 1) a policy that has investment growth that exceeds (named non-exempt). Though they do note that only the excess amount is taxable, not the full amount.
> They also note that virtually all policies issued in Canada at the time of the writing are designed to avoid becoming non-exempt...


Yes my policy will attract tax if I contribute above a certain level. But the protection offered is liberal. It is with Industrial Alliance.

But the proceeds of an RRSP or investment account will become taxable upon death. The potential exception is when the RRSP has a spouse named as beneficiary who has contribution room.


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## MoneyGal (Apr 24, 2009)

kcowan said:


> Yes my policy will attract tax if I contribute above a certain level. But the protection offered is liberal. It is with Industrial Alliance.
> 
> But the proceeds of an RRSP or investment account will become taxable upon death.* The potential exception is when the RRSP has a spouse named as beneficiary who has contribution room*.


No - you can roll over an RRSP to a spouse without triggering taxes...This is independent of whether the spouse has RRSP room. 

Here's the relevant section from CRA (see RC4177, Death of an RRSP Annuitant at http://www.cra-arc.gc.ca/E/pub/tg/rc4177/rc4177-e.html#P40_6088):

*General rule – deceased annuitant*

When the annuitant of a matured RRSP dies, we consider that the annuitant received, immediately before death, an amount equal to the FMV of all remaining annuity payments under the RRSP at the time of death. This amount and any other amount the annuitant received from the RRSP during the year have to be reported on the deceased annuitant’s income tax and benefit return for the year of death.

A beneficiary will not have to pay tax on any payment made out of the RRSP, if the amount has been included in the deceased annuitant’s income.

*Exception* – *spouse or common-law partner is the sole beneficiary of the RRSP* – We do not consider the deceased annuitant to have received an amount from the RRSP at the time of death if, in the RRSP contract, the deceased annuitant named his or her spouse or common-law partner as the sole beneficiary of the RRSP. In this situation, the RRSP continues and the spouse or common-law partner becomes the successor annuitant under the plan. All annuity payments made after the date the annuitant died become payable to that successor annuitant. The successor annuitant will receive a T4RSP slip for the year of death and for future years. The slip will show the annuity payments he or she received in box 16. The successor annuitant has to report the annuity payments on line 129 of his or her income tax and benefit return for the year they are received.


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## MoneyGal (Apr 24, 2009)

This isn't a perfect place for this post, but I have just been reading about a recently-released judgement in the Ontario Supreme Court which found that a dependent can trump a named beneficiary of a life insurance policy. 

In this case, _Stevens v. Fisher_, the death benefit of an insurance policy with a named beneficiary was brought into the estate and distributed according to the estate rules. 

It's worth googling to read some of the facts in the case - the main point, though, is that naming a beneficiary does not always mean that a death benefit will pass outside the estate. The dependent in this case was not a minor, but a common-law spouse.


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## Eclectic12 (Oct 20, 2010)

kcowan said:


> Yes my policy will attract tax if I contribute above a certain level. But the protection offered is liberal. It is with Industrial Alliance ...


So this is a specialised life insurance policy - which means the "will be taxable irrespective" applies to that policy and even then, only when the contributions exceed a limit.

I suspect there's a lot more people who have a life insurance policy that only has premiums, where the proceeds will be tax free & at worst, might have probate fees if the estate is named as beneficiary.

[ There's likely more people on CMF who have a life insurance/investment policy. ]


Cheers


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## MoneyGal (Apr 24, 2009)

Eclectic12 said:


> So this is a specialised life insurance policy - which means the "will be taxable irrespective" applies to that policy and even then, only when the contributions exceed a limit.
> 
> I suspect there's a lot more people who has a life insurance policy that only has premiums, where the proceeds will be tax free & at worst, might have probate fees if the estate is named as beneficiary.
> 
> ...


Presumably this is a permanent insurance policy subject to the MTAR rule ("maximum tax actuarial reserve" tax rule), which has nothing to do with tax at death -- but has to do with how growth in the death benefit is tax-sheltered during the life of the policy.


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