The answer to this question is not clearly understood by most people, including experienced attorneys (and even experienced estate planning attorneys), judges, bank employees, and other individuals.
Contrary to popular wisdom, the terms of a safe deposit box agreement with a financial institution typically describe a lessor/lessee relationship. As a result, most safe deposit box agreements only govern the use of the box; they do not govern the ownership of its contents. Thus, even if a co-tenant is listed on the safe deposit box agreement, it does not automatically vest ownership of the contents to the survivor, upon the death of one co-lessee.
In fact, most safe deposit box leases clearly state in writing that nothing in the lease provides any transfer of ownership during the lifetime of the initial depositor or upon death.
In short, by adding an individual as a co-lessee of a safe deposit box, the original depositor is not creating a joint tenancy with right of survivorship.
Many states have particular statutes on this point, but the vast majority of states instead rely on common law holding that there is absolutely no transfer of legal ownership during the life of a co-depositor which creates a joint tenancy during the lifetime, nor does it create any type of transfer on death status to the surviving co-lessee on the safe deposit box.
Many attorneys falsely believe that a type of joint tenancy is created and the contents of the safe deposit box simply pass to the surviving co-lessee on the lease, similar to a co-owner on a joint bank account. However, this is simply not true.
If an individual in Hawaii dies with a simple will, the assets in a safe deposit box are subject to probate and must be distributed according to the terms of the will (typically as part of the residuary) or a tangible personal property list that may be attached to or referenced in the will. If the decedent had a trust and properly transferred his personal property to his trust during his lifetime via an assignment, the terms of the trust would control.
The problem sometimes arises when individuals claim that a safe deposit box lessee has transferred one or more items to them orally and has symbolically delivered the property to them through a constructive receipt by adding them as a co-lessee on the safe deposit box. This creates a complex question of fact as to whether oral delivery and receipt of an item have occurred.
For these reasons, it is incumbent upon an individual that wishes to make a lifetime gift of an item(s) located in a safe deposit box to either transfer the item(s) out of the safe deposit box during their lifetime or properly document the depositor’s intention to gift the item(s) with a written, express agreement documenting the gift.
In the latter scenario, it is incumbent upon the estate planning attorney to work with the depositor to ensure that the specific item(s) in the safe deposit box are earmarked for a specific devisee or beneficiary in a tangible personal property list or otherwise clearly delineated in the will or revocable trust.
In short, people should not rely on the fact that an individual has been merely added as a co-lessee to a safe deposit box as a method to transfer assets during the lifetime or at the death of the depositor to said co-lessee.
Michael D. Rudy, Esq.