Traditionally, almost every American family had a safety deposit box, often called a lockbox. Lockboxes were usually physical, metal-box drawers in locked vaults at local banks. Annual rents were paid by owners of lockboxes to the hosting banks in exchange for the safety from theft, fire and flood that the lockboxes provided.
Lockboxes were where family members kept important papers like deeds, wills and other documentary family heirlooms, including passports and immigration paperwork. Typically, also, families would store at least some monetary proceeds that were represented by physical paper (currency and savings bonds, for example) in lockboxes.
Lockboxes were a major focus for taxing authorities in Ohio prior to 2013, while Ohio had an estate tax. For Ohio residents who died before 2013, many of them owed estate tax in conjunction with their passing. That tax was calculated against how much wealth the person possessed when the person died. The Ohio Department of Taxation wanted to ensure that every penny that a person owned upon death was inventoried so that any appropriate tax was paid.
As a result, Ohio law dictated a process for opening lockboxes when the owner of a lockbox had died. In sum, opening a lockbox in this context required a court order signed by a judge brought to the bank where the lockbox was located along with two independent, non-family members as witnesses to the opening and inventorying of all of the contents of the lockbox. The independent witnesses included an employee of local county Auditor’s Office and an employee of the bank.
The process of oversight was understandably imperfect. Independent witnesses were required to oversee the opening of deceased people’s lockboxes, but witnesses were not required to oversee surviving family members who cleaned deceased people’s homes and could find money stored under mattresses or in coffee tins.
Nonetheless, shortly after Ohio stopped imposing estate tax on deceased people’s assets, Ohio law was changed to provide that deceased people’s lockboxes could be opened without extra witnesses. Obviously, not just anyone can stroll into a bank and open a deceased person’s lockbox. There still needs to be proof of the lockbox opener’s appointment as executor (if there is a will) or personal administrator (if there is no will) of the owner’s estate. If the lockbox is owned by a trustee of a trust, the trustee also must provide proof of authority to access the lockbox.
Without oversight, lockboxes can be perceived by people as great ways to “hide” money. However, there is no practical value in “hiding” money. Nobody owes estate tax unless that person has already given away at least $11 million while alive or after death (which $11 million total triggers federal gift/estate tax implications). Most of us do not have a financial net worth that high.
And, when applying for Medicaid or other need-based programs, each applicant is required to identify every penny of assets that the person owns regardless of whether those assets are in a lockbox, in a bank account or buried in a box in the backyard.
Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at Lee@LeeSchroeder.com or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.