Feeling overwhelmed at times by all the paper in your life? Loan documents, social security documents, health documents, mortgage documents, real estate purchase documents, bank statements, credit card statements, investment records, wills and power of attorney, purchase records, business records, birth certificates, passports, military records, marriage and/or divorce papers, and the list goes on. Oh yes, let us not forget all our tax documents!
The question remains what to do with all these documents: where to store them, how to organize them, and lastly how long to keep them. Well, here are a few suggestions.
First of all, gather all your documents and divide them into groups similar to those outlined below.
1. Originals that you must keep but rarely access.
This group might include military records, marriage/divorce certificate, older educational records, citizen ship documents, various legal documents, etc.
What goes into this group, of course, will vary from person to person. Important here is that you pull out all the documents your rarely need, nonetheless must keep forever, and put them into a safe place. You might consider renting a safe deposit box at your bank or some other institution.
2. Next are the documents you do access from time to time and must keep.
Hence you might want to keep them a bit closer at hand. Examples of documents in this group include medical directives, health documents, wills, power of attorney papers, etc. In all likeness you will keep most of those documents forever as well. Consider investing and storing those documents in a fire resistant home safe instead of a filing cabinet. This should greatly contribute to their safe keeping.
3. Documents you need to access and keep for a certain amount of time.
Investment and Retirement documents form the bulk of this group. Included are your standard 401k/IRA/Retirement documents, other investment account statements, insurance documents, loan documents, real estate related documents (purchase, improvements, sales, etc.). Storing these documents in a filing cabinet at home would be adequate, twice since you access many of those documents on a more frequent basis. The length of time you keep the above documents varies. Most real estate and investment document needs to be retained for at least 7 years after the investment or real property has been sold. When in doubt, check with your tax professional.
4. Documents you don’t need to access but need to keep for a certain amount of time – Tax Documents.
Now this can grow into a rather large group. Here we are talking about anything and all that is and has been used as supporting document with your tax returns. Make sure all documents in this group are properly organized and stored in a locking file cabinet.
Most tax documents need to be retained somewhere between three to seven years. But again, check with your tax professional! Retention requirements can vary depending on filing dates and a number of other special situations.
Having organized and stored your important papers in a safe place will ultimately make your life easier in addition to giving you peace of mind!