Getting Your Records Organized is More Important Than You Think

Keeping track of important papers is critical to maintaining an accurate picture of your finances and ensuring that your heirs are cared for in the way you want. The paper trail that follows us throughout our lives includes records that track births, deaths, marriages, divorces and adoptions — among other life changing events. Personal records also document purchases, investments, assets and home improvements.

Keep in mind: The better organized you are, the better you can manage your affairs, support claims on your tax returns, and be certain that your heirs can easily find the paperwork they need.

Here is a list of some important documents you need to save:

Taxes. Copies of past returns (you should generally keep these for seven years); receipts of deductible expenses; income statements including any interest and dividend earned; tax payments, and canceled checks (retain for the statute of limitations).

Real estate. Deeds; title papers; appraisals; records of renovations, additions and repairs; mortgages and receipts of payments, and records of purchase prices and closing and selling costs.

Finances. Bank statements; stock and bond certificates; mutual fund records; records of purchase dates and prices, dividend or interest payments and dates; savings certificates; savings passbooks; loan papers, list of credit cards.

Insurance and retirement. Insurance policies; IRA documentation; descriptions and statements from pension and profit sharing plans; beneficiary designation forms.

Personal documents. Wills; trust agreements; powers of attorney; living wills; birth and death certificates; marriage licenses; adoption and custody papers; divorce and separation papers; property agreements; military records; passport, and Social Security records.

Once your files are organized, don’t fall into the trap of saving unnecessary documents. Clean them out periodically. And decide where to store the documents. For example, you might use a safe deposit box for originals, set aside room in a fireproof filing cabinet for copies and give other copies to loved ones or advisers. The important thing is that the papers are safe and your loved ones know how to access them. Your future — and theirs — depends on it.

Keeping it All Safe

A safe deposit box is an effective way to protect your will and trust documents.

In fact, all important papers should be stored in a safe deposit box, including stocks, certificates of deposit, birth and death certificates, documents related to buying and selling real estate, life insurance policies, and notes proving loans you have paid.

But you don’t have to store everything there. You can keep records of credit cards, other insurance policies, major purchases and warranty information in a safe place or dead storage, but not necessarily in a safe deposit box. The same applies to copies of income tax returns filed within the last three years and the canceled checks and receipts you save to prove your income and deductions.

The deed to your house is rarely needed and doesn’t require safe storage. Anyone interested in it can rely on courthouse records.

Keeping an original and a copy of important documents is a good start, but may not be adequate. Disasters such as tornadoes and earthquakes, as well as the September 11 terrorist attack in New York City, taught us the importance of backing up important data.

If you have only one copy of your documents stored in a bank vault and the bank is destroyed, your records will be gone too, or at the very least, some important material may not be accessible for several weeks.

Make triplicate copies of important documents and store them separately. And make sure your lawyer, accountant or trusted family member or friend knows where your important papers are and can readily access them.