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Posted on Sep 9, 2015 | 14 comments

What records to keep? And how long?

Print and read this article once, then feel free to shred it.

Most papers can be touched once, and then tossed in the garbage like a hamburger wrapper.

Yet we all have some valuable identification records, financial statements, contracts or receipts that we ought to file and store in a safe place for easy retrieval later on.

Any victim of identity theft, fire, or flood will be glad for the time taken in advance to file and store critical records. And, if you’ve ever had to settle the estate of a friend or loved one, you’ll be relieved if you find official records in one, organized location.

Here’s a quick guide to evaluate what records you should keep — and for how long — when sorting through the growing amount of paperwork arriving each year:

General guidelines for what to keep and for how long.Forever and ever

Starting backwards, here are some records you should keep forever:

  • Birth, marriage, and death certificates.
  • Adoption records.
  • Divorce papers.
  • Wills, living wills, and powers of attorney.
  • Social Security cards.
  • Property deeds and mortgage documents.
  • Pension plan documents.
  • ID cards and passports.
  • Copy of 1040 tax returns.
  • Life insurance policies.
  • Vehicle titles and loan documents.
  • Other legal papers.
  • College transcripts.
  • Accident reports, insurance claims.
  • Inventory of safe deposit box contents.

Until sold or updated

These records should be kept until the property or item is sold or the account updated:

  • Loan documents.
  • Appraisals for jewelry, art, or other valuables.
  • Warranty documents and receipts.
  • Video of home contents in case of insurance claim.
  • Year-end account statements to show the cost basis for investments on your taxes.
  • Savings bonds and investment statements.
  • Vehicle records.
  • Medical bills until claims paid by insurance company; longer if you need medical expense deduction on your tax return.

Seven years

Keep state and federal tax records and receipts for seven years, saving a copy of your 1040 tax return forever.

Six years

Keep documents showing home sale, purchase, or expenses for improvements for six years after you sell your home.

Three years

Retain those thank-you letters from charities, and also year-end investment statements, in the event you are audited by the IRS.

One year or less

Most of these records can be shredded after one year:

  • Pay stubs and bank statements.
  • Annually updated Social Security statements.
  • Annual insurance policy statements.
  • Annual retirement plan statements (401(k), 529, IRA, etc.).
  • Bank deposit and ATM receipts until reconciled with your monthly statements.
  • Credit card bills and statements. Longer if needed as proof of a charitable contribution or product warranty.
  • Utility bills.

Shreddable

For your security, shred expired credit cards, visas, passports, and other identification.

Storage

Consider keeping at least two storage locations for your records:

  1. One for active files of less than three years to access quickly. This could be a home firebox or secure file cabinet located in a dry and safe spot.
  2. One for permanent hard copies that back up your home files. A credit union or bank vault is recommended. (Note: In some states, safe deposit boxes are closed at time of death, so keep a copy of your will in your home files or with a trusted relative or friend.)

Many people use a third location to store important records -– an external hard drive that’s password protected. Scanning and storing documents electronically is a great way to put lots of records into a tiny space, particularly if you regularly update the system.

Final thoughts

Develop a habit of regularly filing your paperwork –- say, 20 minutes each week – to avoid accumulating a backlog of papers and cluttered desk. You’ll feel better knowing that critical records are available to you at a moment’s notice!


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14 Comments

  1. I was told that passports of deceased people were to be mailed back to the passport office. Your column says to shred them – which is correct?

    • Hello Pam,
      Some families like to keep the deceased’s passport as a memento, but if you’re worried about security, then you should mail the passport with instructions (such as cancelling and returning the passport to you, or cancelling and destroying the passport) and a copy of the Certificate of Death to:

      Consular Lost and Stolen Passport
      U.S. State Department Passport Services
      1111 19th St. N.W., Suite 500
      Washington, D.C. 20036

      You may want to call (877) 487-2778, the toll-free number for lost or stolen passports for additional guidance.

  2. i have a lot of cancelled checks and check registers from 1990. Can I get rid of them?

    • Hi Carolyn,
      Unless you need them for tax purposes, you can generally get rid of them after a year.

  3. Regarding 1040 tax returns, I thought we only had to keep 7 years, list says forever, which is correct? Thanks.

    • Gayle, the specific recommendations on how long to keep a 1040 vary, but they provide a good single compilation of all your personal and financial data that’s good to be able to reference long-term.

  4. Why do you suggest keeping divorce papers forever? Also, if a person gets divorced, why would they need to keep the old marriage license?
    Thankyou

    • First, STCU is only making recommendations. We are not your lawyer or accountant, so if you don’t like the idea of keeping documents forever, feel free to do whatever you want.

      Second, many municipalities record marriage licenses and divorce degrees, so if you are willing to trust that the courthouse will never burn down, you could probably survive without keeping your own copy of your marriage and/or divorce papers.

      But if you ever need the documents, it will be a lot easier to stuff them in your files than to have to return to the Nebraska courthouse where you first got married.

      Marriage and divorced are legal agreements that many laws, regulations, and court orders consider. If you do not have a record that proves your marriage and/or divorce, you may be denied certain entitlements or you may be unable to establish certain rights and privileges allowed by a judge. Here are a few examples:

      1. Collecting Social Security benefits. If you and your ex-spouse were married for more than 10 years, you may be entitled to a portion of your ex-spouse’s Social Security benefits when s/he retires. The SS Administration, however, will only start sending checks if you can provide a copy of your dated marriage certificate and dated divorce decree. No record, no money.

      2. Modifying the divorce settlement. To change back to your maiden name, to contest child support payment (or nonpayment!), or to modify your divorce settlement, you would need a copy of the settlement agreement and the final judgment and decree.

      3. Answering an IRS audit. An audit by the Internal Revenue Service can reach back a decade, so your legal marriage or divorce records would be important to prove to the auditor that your income, assets, credits, and deductions were properly applied, or to show that those were actually the responsibility of your ex-spouse.

      4. Preserving the family history. Your kids and grandkids may be more sentimental than you are, so you’ll be doing them a favor if they ever decide to piece together the family tree. A copy of your marriage and/or divorce agreements is, for better or for worse, proof of an important moment in your life and family history. Do the kids a favor: Keep the records.

      For more information, you may want to check out this 2010 article from Consumer Reports: http://www.consumerreports.org/cro/2010/03/conquer-the-paper-piles/index.htm

  5. Great information, but what about small business owners or non-profit groups???

  6. Do I need to remove the staples from the documents before shredding

    • Hi Julie! If it can be easily done, then removing the staples is helpful. But if a few slip through, it isn’t a big problem.

  7. how will this work tomorrow? do i come and do it myself? or hand it off? is the shredder a big truck? would love to plan a little more if you could let me know what it will look like!

    • Jackie, you’ll pull up in your vehicle (we’ll have signs and individuals there to help direct traffic.) When you get to the front, our STCU volunteers will unload your papers to be shredded (up to 5 boxes) and dump them into large bins, which the large shredding trucks will then securely destroy. We look forward to seeing you there!

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