Whether it is a good idea or not to keep investments in a safe deposit box depends on the investment. Certainly, some investments definitely require this sort of protection. These would include investments such as rare coins, stamps, and similar collectables, gold and silver, and negotiable instruments, such as bearer bonds that can be cashed by anyone who possesses them. The cost of renting the box is justifiable for keeping these items safe.
What about stock certificates and other such proof of ownership? The need is less critical since these can be replaced, but the delay and inconvenience of replacing them may warrant safeguarding them as well. Although less critical, many individuals feel the need to also include insurance policies, deeds, birth certificates, wills, trust documents, etc., in their safe deposit box. If you do include the originals of these documents in the lockbox, be sure to make digital copies or photocopies for everyday reference. It is also important that the individual(s) you designate to handle your affairs in case of death or incapacity has a list of your investments and important documents and knows where they are kept.
If you do rent a safe deposit box to store valuables, you may wonder, is the cost a tax deduction? The answer is “yes” if the box is used to store taxable income-producing stocks, bonds, or investment-related documents, if you itemize your deductions, and if the box rental plus other “miscellaneous” deductions exceeds 2% of your adjusted gross income. The answer is “no” if you use the safe deposit box only to store jewelry or other personal items or for tax-exempt securities.
If you have questions related to this topic, please contact this office.