How to Keep The IRS -- and Other Snoops
                      -- Out of Your Safe Deposit Box
          
          
               A safe deposit box is a veritable necessity for
          keeping things like offshore bank books, precious
          metals certificates, bearer securities, cash, coins,
          etc. Yet a safe deposit box can create its own
          problems.
               One obvious problem is that upon death of the
          boxholder, the bank is required to deny access to the
          box until a properly appointed executor and an IRS
          agent open the box. The IRS will presume that all
          assets are the property of the deceased, so that if you
          are holding assets that you have given in trust to your
          children, they will become part of the taxable estate -
          - or worse, they may be applied to some debt of the
          estate. Unreported foreign accounts could even be
          seized as being part of a crime. IRS agents tend to
          assume criminality, and you are no longer available to
          provide an alternative honest explanation. 
               But there are other safe deposit box problems that
          are at least as important as dealing with the box upon
          death. For example, if the box is in one name only,
          many banks will not honor a power of attorney to let
          somebody else have access to the box in an emergency,
          unless the power of attorney is signed in person in the
          bank. If you are in a foreign hospital, and need to
          authorize your spouse to open the box, this could
          become a major problem.  Even if the bank will accept a
          notarized power of attorney, there may be problems in
          arranging for a foreign notary to visit, then having
          the notary certificate authenticated by the U.S.
          Embassy or Consulate, and sending it to the bank.
               The solution is to form a corporation to hold your
          principal safe deposit box. The corporation can change
          the names of the people authorized to access the box
          simply by furnishing the bank with an updated
          resolution form. And a box belonging to a corporation
          is not frozen by a bank because of the death of a
          natural person, even if that person is the sole person
          then having access to the box.
               To do this properly, we recommend that the
          corporation be used only to hold the safe deposit box.
          This provides the maximum privacy, because the
          corporation has no activities to cause it to be audited
          or investigated. Under federal law, even an inactive
          corporation must file a tax return, but a corporate
          return showing no income can be filled in each year
          without having to pay an accountant to do it. (Usually
          after three years of zero income returns, the IRS sends
          out a form letter saying there is no need to file
          further returns unless the corporation begins to have
          income.)
               The other obligation that must be met is to ensure
          that the corporation is in good standing, so that you
          don't have a crisis in which the corporation no longer
          exists because the annual reports were not filed.
          Delaware is the best state for this, because an
          inactive corporation only needs to file a simple annual
          return and pay an annual fee to the state (and an
          annual fee to its Delaware registered agent.)  
               Privacy can be maintained by having the registered
          agent file the annual return with the state, signing it
          as "incorporator," which keeps the list of officers off
          the state records. Most large corporation services will
          not provide annual report filing services, but the one
          mentioned below will do so. To be entirely safe, one
          can even leave the registered agent with funds to
          prepay the state fees each year, thus ensuring that
          there is no accidental termination of the corporation
          because of a late payment.
               Since the holding of a safe deposit box is not
          deemed to be conducting business by any state, the
          Delaware corporation is not required to qualify to do
          business in the state in which the box is held, thus
          improving privacy and keeping the existence of the
          corporation out of the public records in your own
          state.
               For information on a service that can form a
          corporation for you in Delaware (or in any state),
          write to: 
                    Incorporation Information Package 
                    818 Washington Street 
                    Wilmington DE 19801.
               Keeping the IRS away is not the only reason to
          have a corporation hold your safe deposit box. It also
          keeps a personal creditor from being able to have the
          box frozen by a court for an inspection of the
          contents, which can easily happen during a lawsuit or
          other claim against you.