Day 13: Important Documents and Papers
Nothing seems to accumulate faster than paper in a household. Between junk mail, important mail, not important mail, record paper, work paper, school paper, flyers, business cards, maps…
Do you ever get exasperated by all the paper? I know you do, and so do I.
A lot of paper isn’t important or has short-term importance, but some papers are incredibly important with lasting significance. Knowing what to keep and for how long and what to toss… and where to put what is the focus today.
Yesterday, we began to set up a household filing system.
Today, we’ll dive a bit deeper and look at archival documents that should be kept in a household safe and what should be kept in a safe deposit box.
The office area is so important that we’ve split it up into 4 days as follows:
A Paper Timeline
Consumer Reports (2016)
Under A Year
In this file, store your ATM, bank-deposit, and credit-card receipts until you reconcile them with your monthly statements. Once you’ve done that, shred the paper documents (to avoid ID theft) or securely trash electronic files unless you need them to support your tax return. Keep insurance policies and investment statements until new ones arrive.
1 Year Plus
You’ll want to hold onto loan documents until the loan is paid off. That will often be for more than a year. Then toss those papers out. If you own one or more vehicles hold onto the titles until you sell them. If you have investments in stocks, bonds, mutual funds or anything else, keep the investment purchase confirmations until you sell the investment so you can establish your cost basis and holding period. (If that information appears on your annual statements, you can keep those instead.)
If you fail to report more than 25 percent of your gross income on your tax returns, the government has six years to collect the tax or start legal proceedings. So when it comes to determining how long to keep tax records—electronic and paper— we recommend seven years, just in case. Also, hold on to employment records, W2s and 1099s, tax receipts, tax deduction and donation receipts.
Essential records such as birth and death certificates, marriage licenses, divorce decrees, Social Security cards, and military discharge papers should be kept indefinitely. Also hold on to defined-benefit plan documents, estate-planning documents, life-insurance policies, and an inventory of your bank safe-deposit box (share a copy with your executor or your attorney).
Safe Deposit Boxes
A safe deposit box is considered the safest place to put important documents that are not easily replaced. However, “you should not store items you might need on short notice or in an emergency, says Lawrence Lehmann, a partner in the law firm Lehmann Norman & Marcus in New Orleans, and president of the National Association of Estate Planners & Councils. That list includes passports, medical directives or durable powers of attorney, health care proxies, and revocable living wills.”
Bank safe deposit boxes are only accessible during branch operating hours and the boxes are typically sealed when the bank receives a death notice. To open a sealed safe deposit box, estate representatives are required to provide court papers to the bank.
Items to store in safe deposit boxes might be:
• Property Deeds
• Savings Bonds
• Vehicle Titles
• Household Inventory Photos
• Family Heirlooms
• Photo Negatives
“Coping with the after effects of a disaster is difficult under any circumstance, but when vital records are lost, the trauma compounds. If you haven’t done so already, take a few hours to organize your important documents and put them in a safe place. Even if you never experience a disaster, the peace of mind gained from organizing your records is well worth the few hours spent on this important task,” advises USCG.
Objective: To gather and identify important papers, original documents, and make decisions on where to put them.
• Research safe deposit boxes at your bank or in your community. Determine costs, hours of bank operation, and who has access to the box. Decide if this is a good solution for your documents.
• Research the cost of home fireproof and waterproof safes.
• Organize important papers into two groups: (1) original documents, papers and information that would be difficult or impossible to replace but that I wouldn’t need immediate access to in the case of disaster or death and (2) important documents, papers and information I would need access to in the event of disaster or death.
• Consulting the Paper Timeline, eliminate unnecessary paper.
• Sort important papers and documents into appropriate files according to the Paper Timeline.
Creating a Mail Station
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Easy Steps to an Organized Life in 31 Days or Less (Amazon.com)