Throw It Away! (Well, Shred It)

We all have it: that filing cabinet that just gets fuller and fuller, or that stack of paper in that one corner of the room that keeps growing. Our biggest excuse is wondering how long we need to keep the booklet, those tax papers, bills or that paper. Clients ask me all the time, “how long do I need to save this?” and I have not always had a clear answer. So I’ve done some research and here is the answer (for those most common documents):

Tax Documents Personal:

The IRS says that individuals only need to keep tax documents for three years. However, professionals and industry standards suggest six years. No need to save those filings from the ‘80s!

Tax Documents Business:

If you have rental properties, the documents relating to rental property expenses should be held until your tax preparer tells you to dispose of them or until the property is sold. For all tax records, originals are not required and scans are acceptable.

Estate Planning Documents:

Obviously, you save these documents forever. I mean, we made them for you. Unless you redo your estate plan. If you redo your estate plan, your old documents can be destroyed. Our recommendation is call us first; we can help you decide what to keep or destroy. Even here, though, times are changing and electronic copies are sufficient for some of these documents.

Medical Records:

Do you need to keep a record of every checkup? No. But for a chronic condition or major surgery, it’s good to hold on to at least digital records until the condition is properly managed or resolved.

Bills, receipts and financial statements:

There is no reason to keep physical copies of utility bills, financial statements or receipts of payments. Electronic versions of these documents are always retained online for several years. If you like to track a payment, holding on to a bill for one month in order to confirm a payment shows as posted is long enough.

Vital Records:

Keep it forever! Originals of all vital and legal records, including: birth and death certificates, marriage licenses, adoption papers, military service records, property deeds, car titles, Social Security cards and professional licenses.

Savings Bonds:

If it is a paper bond then you should keep the original or convert it to digital.

Original estate planning documents and vital records should be kept somewhere secure and

protected. Use either a safety deposit box or a fireproof safe (these can be purchased from your

local hardware store).