Decluttering Documents: The Keep or Shred Debate

A lot of what comes out this year is about what to toss- then I saw this joke ran across the internet: “My tax return doesn’t bring me joy- Does that mean I should toss it?”

Professional opinion- probably no, but it depends on a few factors.

With that in mind- what documents are a good idea to keep?

There are a lot-Let’s go over the most common:

• Taxes
• Financial Documents
• Property Documents
• Insurance Policies
• Debt/Loans
• Estate Planning
• Other Documents

Taxes

Plan on keeping tax returns for at least the last 3 years. If you claimed a loss with any investments make sure to keep the returns and associated documents for 7 years. Remember to keep the supporting documents too! Think W2s 1099s and receipts

Also remember retain paperwork related to

-Records about home expenses too- including legal and title insurance fees.

-Records to things like taxes and artwork

-Inherited property: Keep anything that will help you calculate the value as of the date of the person’s death

Financial Documents

When discussing financial documents, think statements: Bank statements, credit card statements, investment account statements, statements from retirement accounts. Financial documents also relate to any other document reflecting assets and liabilities.

For these documents, make sure you keep them for the current year at least. For investments you have claimed a loss on (think brokerage accounts) keep those documents for 7 years in case you need them for tax purposes.

Best practice- be familiar with what normal looks like for these statements so you can spot abnormal (fraud happens).

If you have QDRO related to any retirement accounts- keep that handy too.

Property Documents

You want to keep the deeds, mortgage documents, property tax records for any real estate owned by yourself, or with someone else.

Keep any documents related to ownership and substantial improvements while you own the home; Then keep them handy for 6 years after you sell the home

Also keep expenses related to selling the home handy (like commissions to real estate agents or legal fees)- that will help you calculate capital gains.

Insurance Policies

Health, life, auto, home and any other insurance policies- keep the current documentation on these policies as long as you are paying the premiums.

Debts and Loans

Keep records of any outstanding debts, loan agreements, credit card statements, and any other liabilities accrued during the marriage. It’s a great idea to keep the documents at least for as long as the debt is outstanding. It’s also worth it to consider keeping records of these indefinitely in case questions ever arise and whether the debt was actually paid.

Estate Planning

Keep your Wills, trusts, powers of attorney (medical, financial, general) handy and easily accessible for your lifetime. It is extremely important to make sure you regularly visit these documents (annually). Remember to revisit these documents during life events too. The biggest scenarios I see where these need to be visited in addition to your annual check: Marriage, babies are born, and divorce.

Other Documents

You want to keep things like a Marriage license and Divorce Decree for your lifetime too. These are documents are needed for a variety of reasons (for example applying for spousal benefits on Social Security)

Keep or Declutter?

Keep both physical and digital copies of these documents in a secure and organized manner. Make sure you know where the documents are. Ensure the documents are protected from elements (if you don’t have a fire proof safe or bag- did you know the freezer is a fire proof place). Make sure the documents are protected from theft too.

If you are decluttering documents- consider shredding anything with sensitive information. If you don’t have a shredder at home, consider using a professional shredding service (there are many retail stores like Staples or the UPS store that offer shredding services).

If you ever do run into a keep or declutter question, reach out to a financial professional- It’s not always apparent and we are happy to have a conversation and help you.

Brianna Beski is a financial advisor and CDFA at Raymond James, based in Colorado. She and her team focuses on helping people have confidence in their financial futures. For the rest of the story, please visit her website or email her at brianna.beski@raymondjames.com.

While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJA, we do not render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Brianna Beski of Raymond James Branch 3BA and not necessarily those of Raymond James or Raymond James Financial Services.

Raymond James & Associates, Inc., member New York Stock Exchange/SIPC