Organize Your Important Papers

Personal Finance February 19, 2007|Print

Contents

Organize Your Important Papers

It is wise to periodically review your important papers. Take a fresh look at the types of records and papers you should be keeping at the beginning of each new stage or change in your life. The household might be considered a mini-business since many of the functions of planning, purchasing, and record keeping are the same as they are for any other type of business — large or small.

Importance of Records

You will find that financial records have become a vital part of your life. They are a key to your credit standing, are essential to help you save money on taxes, and also are a continuing indication of your financial progress. If you have systematic plan for keeping track of important papers you can save hours of anxious searching; help preserve peace and harmony; and make it easier to cope with emergency situations.

Record-keeping is also important due to legal and safety factors. Many records and papers can be kept in a home file for ready access, while others should be left with your attorney, placed in a safe-deposit box, or put in a fireproof, waterproof, and burglar-proof home safe. A good rule to follow is to keep the item at home unless it is a legal document or is difficult to replace or duplicate. Then it should be kept in a safe-deposit box or possibly left with your attorney. Following Hurricane Katrina in 2005, many people have explored the idea of sending copies of very important documents to a trusted relative in another state, and also having copies in a fireproof or waterproof file that could be lifted at a moment's notice.

Filing and Storing Important Papers

Plan and evaluate which papers should be stored, where they should be stored,and which should be discarded. Make the decision and file each paper accordingly. Do not just stack papers and plan to return to them later. This is the way things become lost and cause you to waste valuable time in searching for or replacing them.

A home filing system with a space provided for the important things is the key to managing your important family papers. For items kept at home it is not necessary to have fancy filing cabinets or special “offices.” A “business corner” can be set up in any room in the house. A cardboard drawer or metal box can serve adequately for storage of bills and family papers. Filing systems must be planned to meet your needs. You may not need detailed files at the present time. But remember, every type of important paper should be assigned a certain space, kept there until needed, and discarded if no longer useful.

The following guide to record-keeping will help you work out a personalized and efficient system for preserving and safeguarding important family papers. It will also provide a handy reference for deciding what items to keep, why you need to keep them, where they should be kept, and how long to keep them.

You will note that duplicate copies of many family papers should be kept at home for immediate reference. Important reasons for storing some family papers at certain locations are explained beside each category. However, you must make the final decision about where you will store your documents.

Permanent and Semi-Permanent Records

Keep in a safe deposit box or a fireproof, waterproof, burglar-proof home safe—with a list of the contents of the box in your home file.

Family Records

(Keep a copy of an inventory of important family records also in the home file.)

Item to keep Reason for keeping How long to keep
Baptismal and confirmation records Acceptable evidence of birth date when obtaining a delayed birth certificate; proof of church membership Indefinitely
Copyrights and patents Proof of ownership rights Indefinitely
Insurance policies:

List of policy numbers, name of each insured, beneficiary, company, agent

Reference for kinds and amounts of coverage; provides record of payments and premiums and location of policy; provides record of claims Until collected or expires; until all claims settled; duplicate policies can be easily obtained
Passport Identification required for most international travel Retain expired passport to satisfy application requirements for a new one, then discard
Wills Reference; essential for settlement of estate Keep original indefinitely in safe or with attorney or clerk of district court


Property Records

Item to keep Reason for keeping How long to keep
Abstract for real estate To prove clear title Until property is sold
Automobile title and bill of sale Proof of ownership Until property is sold
Burial lot deed—note number of plots Proof of ownership Indefinitely
Deeds and mortgages: Title policy; property insurance policy; mortgage; receipts for payments on mortgage. Record day, month, and year you acquire or sell property; gross sale price; depreciation; legal fees & expense of sale For income tax and estate tax purposes; keep records of improvement to compute capital gains or losses Until property is sold
Household inventory: Appraisals, photos/videos of valuables Insurance claims Updated annually. Dispose of property no longer owned
Property easements Proof of use rights Until property is sold

Financial Records

Item to keep Reason for keeping How long to keep
Contracts, notes, debts: Promissory notes, mortgages, liens, installment contracts, and chattels Evidence of collectible or payable debts; status for estate settlement Until estate is settled
Household inventory: Description of article, date purchased, and purchase price For insurance settlement Keep up-to-date as you dispose of or add new items
Investment certificates: Stocks, bonds, CDs, real estate Proof of purchase After redemption amount received and taxes are settled on gain or loss

Legal Records

Item to keep Reason for keeping How long to keep
Birth certificate (certified copy or original) Proof of birth Indefinitely
Death certificates Proof of death for Social Security benefits and estate settlement Until benefits are secured and estate settled; note cause of death for family health history
Marriage records For proof of marriage to collect insurance, Social Security, and veteran’s federal benefit pension compensations; to settle estate Until all claims are settled, benefits are received, and estate is settled
Divorce decree To clear legal requirements for remarriage Indefinitely
Adoption papers To prove ages to start to school; for obtaining birth certificates for some jobs; to obtain driver’s license; for marriage license; for registering to vote; to qualify for Social Security benefits; to obtain passports; to determine estate heirs Indefinitely
Military service: Service record; summary of benefits To qualify for retirement, insurance, medical, education, and other benefits Recommend that county or city clerk create additional official record of discharge certificates
Citizenship and naturalization papers To obtain certain types of jobs; to obtain passport; prove eligibility to vote Indefinitely

Records to Keep at Home

Family Records

Item to keep Reason for keeping How long to keep
Education records/diplomas Proof of attendance and degrees Indefinitely
Employment records To determine retirement benefits or if there is a worker’s compensation claim Keep last official announcement earned benefits; keep record until all worker’s compensation claims are settled; keep beyond retirement in case you decide to re-enter the workforce
Insurance policies: Automobile; personal liability; homeowner’s or renters; life; health; disability Reference for details of coverage Until property is sold or policy expires and until all claims are settled. Review annually. Until policy expires or is redeemed.
Licenses to practice (copy) To verify credentials Usually displayed; replace with most recent verification; keep copy in a safe place
Family advisers: Names, addresses and telephone numbers Ready reference when need (medical, legal, etc.) arises Update when changes are made
Medical history: Immunizations, operations, illness, medications, etc. Reference Indefinitely on all family members; update often
Funeral plan documents Reference Indefinitely; update as needed
Record of Important Papers Reference Indefinitely; update as needed
Subscriptions and buying clubs: Titles with order & renewal dates; membership details Reference Until subscription expires; handle complaints or cancellations
Organizational memberships Reference Until membership is dropped
Keys (labeled) and safe combination safe-deposit box, car, house, home safe Access as needed Until property is sold or safe-deposit box is relinquished

Property Records

Item to keep Reason for keeping How long to keep
Automobile: Certificate of title and bills of sale Essential for transfer to new owner when car is sold Until car is sold or disposed of
Guarantees and warranties For proof of date of purchase; to determine service and parts guaranteed Until no longer valid
Household inventories: Record item, cost and date of purchase or sale For insurance claims to establish values; net worth statements. Pictures of items are helpful when making claims. Keep list up-to-date as you dispose of or add household items; make a copy also for safe-deposit box
Appliance and other manuals For reference on use and care Until sold or discarded
Pets: Pedigree; health and license records Identification

Financial Records

Item to keep Reason for keeping How long to keep
Account books: Goals, spending plan, record of income and expenditures For reference and comparison; used to determine net worth and make changes in income and spending patterns Can show profit or loss over multiple years
Checking accounts: Number, location, and canceled checks or photocopy pages of checks List all account numbers with addresses, phone numbers; save checks needed for income tax deductions and proof of important payments Minimum of at least six years of checks
Credit card information: Names, addresses and phone numbers of issuing companies; card numbers Purchase of items on credit; use of card and payment of balances due can give you a good credit rating If card is not in current use, cancel by writing to company; if lost or stolen, notify company immediately by phone
Housing records: Improvement receipts, lease/rental agreement copies, utility deposit receipts, mortgage payments, property tax records Compute capital gains/losses; income tax basis in residential replacements Keep records until property is sold
Receipts and receipted bills Proof of payment. For charge accounts— if they are tax deductible; proof of value on insurance claims. Keep credit card receipts until bill is paid; keep larger item receipts while items are in your possession
Safe-deposit box inventory Information for family members Revise list annually
Financial institution monthly statements and/or savings pass books Reference for completed transactions: Deposits and withdrawals Keep account locations and numbers in safe-deposit box; minimum of a year
Income tax returns: Federal and state (if applicable) returns with substantiating records Verification of taxes paid Three years minimum for possible IRS audit; six years if 25% of gross income omitted; unlimited if fraudulent report
Investments: Copies of mutual funds, stocks, bonds, real estate, CDs, etc. Statement of earnings and transactions as reference information Keep initial and current investment quarterly statements
Retirement records: Employee pensions, annuities, Keoghs and IRAs For reference; proof of employer-employee contributions, payments and benefits received or payable Until fund is exhausted

Legal Records

Item to keep Reason for keeping How long to keep
Living will (original with additional copies made) For reference specifying your end-of-life care; instructions to your doctor and other health care providers (i.e., hospital, nursing facility, hospice, or home health agency; instructions for close family members) Keep a list of where copies are distributed to be able to provide most recent copy if changes are made; don’t store in a safe- deposit box that may be difficult to access without patient’s permission
Will and/or trust (copies) Unsigned copy for home reference Update copy if will or trust is changed
Durable power of attorney: Specify the extent of power delegated to one or more persons: generally, for health care, and for financial decisions Gives others the power to make health care and/or business decisions when you are no longer able to make decisions on your own Replace by latest version if changes are made
Personal representative and guardian appointments For official notification of agent to settle estate and provide care of children under legal age Until official duties are completed
Social Security card Needed to apply for benefits; identification number needed on many types of applications and records Indefinitely

Papers to Carry with You

Make a list of these for your home file

Item to carry Reason for carrying
Credit and/or electronic banking cards Identification and to pay for or charge purchases; to make other transactions
Driver's license Identification and evidence of legal eligibility to drive
Auto insurance card To identify issuer in case of accident
Donor card To donate body organs and to donate body to medical school or training program for use in medical education or research
Medical information: Blood type, allergies, diseases (such as diabetes, heart disease, epilepsy) Emergency treatment. Place note in household files for ready reference in case of loss.
Health insurance card (Medicare and/or other) Identification to use during hospital admittance
Personal identification: Name, address, and phone for yourself and friend or relative contact Identification, especially in case of emergency
Doctor preferred Notification in case of emergency
Organization membership cards Identification and proof of membership