Organizing Your Most Important Papers

One thing each of us can do for the future is to get our personal and financial records in order. These records are both useful and something you will need on numerous occasions throughout your lifetime, including annual income tax preparation, financial planning and estate planning. It may even be relatives or friends who will need it in the event that something has happened to you. If you become incapacitated or pass away, your loved ones will need this information and documentation to take over your financial affairs, deal with insurance claims, apply for government benefits (such as medical assistance), or to settle your personal and financial affairs in the event of your death. You’re doing your loved ones a tremendous favor by keeping good records. Your filing system doesn’t need to be elaborate, just organized. The following is a list of what records you should maintain and how long you should maintain them.

Keep the following documents forever in a safe or safe-deposit box (and keep a second copy, if possible, in another safe location): Adoption papers, Appraisals, Birth certificates, Death certificates, Citizenship papers, Military records, Custody agreements, Divorce papers, Powers of Attorney (medical and financial), Wills/Revocable Trust (as well as Codicils or Amendments), Deeds and mortgage information, Bonds or Stock certificates, Life or long term care insurance policies, as well as a list of bank and brokerage accounts, and lastly, a list of important contacts (lawyer, accountant, doctor, children, parents, etc.).

Keep these documents as long as you have, or are responsible for, the underlying asset (such as a house or a car): Insurance policies, Purchase or cost basis information for securities, business assets or real estate, Receipts for important purchases like technology, art, antiques, rugs, jewelry (or anything else you may need a rider on your insurance policy to cover), Receipts for renovations or other investments made in the property, Title documents and Warranty papers.

The following can be destroyed after seven years (when they are no longer needed for tax purposes): Child-care records, Flexible spending account documentation, 401(k) and other retirement-plan year-end statements, IRA contributions, Purchase records for investments, Records of charitable donations, Records on houses you’ve sold, Tax returns and backup documentation.

The following can be destroyed after one year OR when end-of-year consolidated statements come in and you have filed the taxes for that year: Bank statements, Brokerage statements, Cell phone, cable, telephone, and Internet statements (except when deducting for work-related expenses), Credit card bills, Pay stubs, Social Security statements, and Utility bills.

What should you do with the stuff you toss? With the prevalence of identity theft, don’t just rip it up a couple of times and throw it in the waste basket. Shred it! Invest in a good shredder that’s strong enough to destroy old credit cards, as well. Lastly, keep a basic list of what you’ve maintained and where, and give a copy to a trusted loved one or at least let them know where it can be found.

If you follow these basic guidelines, you or your loved ones should be able to access your important documents quickly and effectively and you won’t feel as though you’re drowning in paperwork.

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