Attend our Senior Financial Wellness
event on Monday, January 14 from 6-7:30 p.m. RSVP here.
Are your file cabinets filled with
old checks, bank statements, and pay stubs? While it’s sometimes tempting to keep
every piece of paper in case you need it, there are documents you can go ahead
and pitch. Reducing that burden will
help you better organize the documents you need to keep. While many financial
and tax professionals will tell you shorter lengths of time to keep documents,
they are ignoring the most important reason to keep financial documents, which
is if you ever become disabled or need long-term care and need to file for
Medicaid. The current Medicaid Look-Back
Period is 5 years, and the possibility of a 10-year Medicaid Look-Back Period
is being studied by Congress, so at a minimum, all financial records should be
kept for at least 10 years. For tax and
other reasons, some documents should be kept forever.
What
to Keep, and for How Long?
·
Copies of tax returns.
Keep copies of your tax returns for at least ten years.
·
Monthly and Year-end bank statements, mutual fund statements,
brokerage statements, etc. Keep all financial records for at least ten
years.
·
Cancelled checks, check registers, old receipts. Keep for at least ten years.
·
Paper copies of credit card bills: Keep for at least ten
years.
·
Utility, phone, and cable bills. Keep for at least ten years if you have an adult relative
living with you in your home. Otherwise,
you can ditch these as soon as your next bill confirms payment.
·
ATM withdrawal receipts and bank deposit slips. Keep for at least ten
years. Mark on the ATM withdrawal receipt
what the cash was used for. If the
deposit slip represents a gift of any sort, be sure to note it on the slip.
·
Receipts for home improvements. These should be kept until the property is sold. They are a
great way to show potential buyers how much you’ve spent to upgrade the
property, and are required to show capital improvements you’ve made for capital
gains tax purposes when your house is sold.
·
Real Estate Documents.
Keep original (recorded) Deeds, HUD-1 Settlement Statements, Title Insurance
Policies, Promissory Notes, Real Estate Contracts, and Certificates of
Satisfaction (sometimes called Mortgage Releases) forever, even on properties
that you no longer own. Other real
estate documents can be disposed of once you have sold the property.
·
Car and Boat Documents.
Keep titles, registration, and sales
documents for at least ten years.
·
Receipts for big ticket items. Receipts for jewelry, rugs, appliances, antiques, cars,
collectibles, furniture, computers, and other expensive items should be kept in
an insurance file for proof of their value in the event of loss or damage.
·
Retirement documents.
Keep these forever. These include IRA contribution records.
·
Stock and fund purchase records. Keep these for as long as you hold those investments, and
for at least ten years after you dispose of these investments.
·
Life insurance.
Policy documents should be kept until the terms are fulfilled. This means that
you should keep these until you die or until the term ends if you have term
life insurance.
·
Defined benefit plan documents. These should be kept forever, even if you no longer work
for the company.
·
Paystubs.
This one financial record you don’t need to keep for 10 years. You can shred your paystubs each year as soon
as you receive your W-2 for that year.
·
Estate planning documents.
Your Powers of Attorney,
Advance Medical Directives,
Revocable Living Trust
or Living Trust Plus™,
Last Will and Testament,
and Incapacity, Estate Planning, and Asset Protection documents should be kept forever,
but should be reviewed regularly -- we recommend annually, but at least every
three years. At the Law Firm of
Evan H. Farr, P.C., we offer a service called DocuBank, to ensure that
that important legal documents will be there when you need them most, such as
when you are hospitalized. DocuBank is an electronic storage and access service
for healthcare directives. Learn more about
DocuBank.
When
You Do Let Go, Shred It
Shredding is the best option to keep
account numbers and other information safe from identity thieves.
