As has been previously mentioned on our site, we believe it is important to have your legal affairs in order so that you can have confidence that you are in a solid legal position. An aspect of building that confidence is having your physical documents in order so that you can reference, update and adjust as needed. This is important if you intend to create a legacy plan where you have all your important legal documents in an easy to access location. Often times people get discouraged in their attempt to create a legacy plan because they are overwhelmed by all of their documents and unsure which ones need to be kept or thrown out. In this article, we hope to bring clarity to what you need to keep forever, what you need to keep for a few years and what needs to be tossed.
DISCARD AFTER 1 YEAR
There are many documents that people receive each and every day that may need to be kept for future reference or thrown out. Often times though many of these items can be discarded after one year. This is due to their implications in your tax return, and once your return is submitted and approved you do not need to keep them any further. The documents that you should keep for a year include: monthly bank statements, monthly credit card statements, receipts of any larger purchase, items related to your current tax return like charitable giving or stock purchases, and yearly insurance policies. When the year is up, it is best to discard these items as they no longer have value. Keeping them longer will create additional stress and clutter preventing you from feeling confident and secure in your legal and financial planning.
DISCARD AFTER 7 YEARS
There are some documents that you need to retain, but only to a point. They typically have to do with tax records. Historically, it is best to keep both federal and state tax returns in a safe place for up to seven years. In the event of an tax audit, you will have your records easily available for reference.
NEVER DISCARD
There are always documents that you need to hold onto forever. These are documents that show ownership, or are legally binding documents that you need to retain. You should store these types of documents in a secure place, like a personal safe or a safety deposit box. They include: estate plans, last will and testaments, life insurance policies, birth certificate, social security cards, marriage documents.
In closing, it is important to make sure your documents are in order so that you can begin to take control of your financial, legal and personal life. One of the ways to improve your position is by having your documents organized. Because we are all inundated with records and documents it is important to make sure you are keeping only the important items. We hope this article sheds some light on what you need to do for your personal legal affairs. If you need help creating an estate plan, prenuptial agreement or just need sound advice from a Tacoma attorney firm that you can trust, contact us at Andrews & Arbenz today to hear how we can help you.