Once again Dahlings it is time to review what to keep and what to throw away and I am going to be posting from several wonderful sources.
Oprah’s financial guru David Bach has a wonderful list in Chapter 2 of his book “Start Over, Finish Rich” I do recommend that you get and read his entire book which goes into things in depth.
Now he states that “except in cases involving fraud, the statute of
limitations on income-tax returns is only three years, so the Internal
Revenue Service does not expect you to hang on to tax records and receipts
for any longer than that. The main exceptions to this are if you've
underreported your income (in which case you should keep your records for
six years) or have claimed a loss from worthless securities (seven years).
(Personally Darlings I recommend 10 years---I never could trust the I.R.S.)
You should keep records documenting the cost basis of your home
and all your other taxable investments for as long as you own them. The
same goes for the basic documents concerning your retirement accounts and
insurance policies, not to mention all loans and mortgages.”
(This goes without saying and again as long as you own them and for at least 10 years after But consult with a very good Tax attorney about this)
This is Bach’s list of
items you should consider throwing away (or shredding if the documents
contain personal information):
Outdated warranties
Outdated instruction manuals
Outdated wills or trusts (provided you created a new one)
Canceled insurance policies
Credit card statements for closed tax years
Canceled checks for closed tax years
Old brokerage statements for closed tax years (unless they have
cost-basis information you might eventually need)
Old annual reports from stocks and/or mutual funds
Old investment newsletters (some people keep these things for years
because they paid for them—let them go)
Now one person posted this suggestion and it is I consider a very worthy thought
“If you are sorting papers for an elderly person who might need to apply for Medicaid you should know that the Medicaid office will want to see the paper trail,
all documentation for any transaction over $1000. Since there is a five
year look-back period, save all bank statements, brokerage statements,
large receipts for five years, otherwise you'll be spending a lot to get
the bank or broker to reproduce them for you.”
Again I still recommend 7 to 10 years back trail
Now Mr. Bach does have a file organization system that does work wonders but we haven’t covered other papers that you should keep---so let’s take a look at those----
Now I have copied this next bit of information for your personal information it is no longer in print but you can find a copy of it on the internet---and it is vital for your organization.
Keeping Family/Household Records Return to Publications.USA.gov
KEEPING FAMILY/HOUSEHOLD RECORDS
This brochure is no longer available in print. It is based on a chapter
from the U. S. Department of Agriculture's 1973 Yearbook of Agriculture
and has been adapted for use online by the Federal Citizen Information
Center of the General Services Administration as a public service. The
chapter on which this brochure is based was originally prepared by
Constance Burgess, a retired Cooperative Extension consumer education
specialist from the University of California. The information is in the
public domain and you are welcome to reference or copy it for educational
purposes.
What to Discard
When was the last time you couldn't find an important paper you knew you
had carefully put away someplace? How much time do you spend trying to
straighten out your household business affairs, especially at income tax
time?
How, in fact, do people decide what records are important to keep and what
they can discard? How do they decide where to store and keep such records
and papers?
Even though each family or household must work out its own system, some
general guidelines can be helpful. As a starter, ask yourself a few
questions:
How easy or difficult would it be for other members of your household to
figure out your record system? Or…do you even have a system?
Who besides you knows where to turn for necessary information about the
family household assets and obligations?
Do you have a listing of people
who are important contacts, such as tax counselors, attorneys, bankers,
brokers, insurance representatives, employers, creditors, and debtors?
Are you sure titles to property and possessions are held in the best way
for all concerned?
If not, you may want to ask an estate attorney or a
trust officer at your bank for professional assistance.
A good record system will provide a bird's-eye view of what happens to
property after you die or when a member of your household dies.
Other
changes can alter plans too---for example, divorce or separation,
children reaching legal age, a long illness, a lawsuit, a natural
disaster, loss of a job, and retirement.
What happens if the place where you live is burglarized or there's a
fire and records are destroyed?
What do you do when you lose track of
important paper.
Which can be replaced, and how do you go about that?
Which ones cannot be replaced, and what do you do about those?
Papers to Keep in Safe Deposit Boxes
Every family household has some important records. Each of us should have
a birth certificate or an acceptable substitute. Since there are many
occasions when the information on your birth certificate will be needed,
it is important that you keep it in a safe place, preferably in a safe
deposit box.
If you have lost or misplaced birth certificates, consider applying for
replacements now, before there is a pressing need. Otherwise, you may have
to wait for one you need quickly.
State registration of births has been mandatory since 1920, and you can
contact your State agency to get a copy. The Bureau of the Census also
will search its files for proof of age.
By the same token, there will be death certificate for every person
someday. These will be needed occasionally and also are best kept in a
safe deposit box.
If you need to obtain these kinds of records, the publication,
Where to
Write for Vital Records is available for viewing or purchase from the
Federal Citizen Information Center, Pueblo, Colorado 81009.
Other important documents to be kept in your safe deposit box include
marriage certificates, divorce or other legal papers regarding dissolution
of marriage, adoption papers, citizenship records, service papers, and any
other document that is either government or court recorded.
The original
copy of a will, in most cases, is kept in the safe of the attorney who
prepared it.
This is highly desirable, since it may save complications
later.
The client receives two carbon copies, one of which may be put into
his or her own safe deposit box.
However, there could be a legal delay in
getting this copy at his or her death.
The third copy, therefore, should
be kept at home where it is readily accessible.
Some of your important papers, such as investments, are of a business or
financial nature.
Certificates for securities are nonnegotiable (can't be
sold or legally transferred) until they are signed by the owner.
Nevertheless, such certificates can be lost or stolen, and the signature
can be forged.
In either case replacement involves both cost and delay.
Such certificates then, when not left with the broker, should be kept in
the owner's safe deposit box.
Government bonds can be replaced without cost, but there will be a delay
of several months. So it is best to keep these in the box also.
Among other investment-type documents that require safekeeping are papers
that serve as proof of ownership, such as deeds for real estate, other
mortgage papers, contracts, automobile titles (if this applies in your
State), leases, notes, and such special papers as patents and copyrights.
Renting Safe Deposit Boxes
If you don't have a safe deposit box, then consider getting one. The
yearly rental, at your bank or savings and loan company, is inexpensive.
Often the smallest size is adequate, though larger sizes are available at
slightly higher charges.
If you do have a safe deposit box, ask yourself if it is large enough to
hold everything that should be in it-and small enough to keep out things
that don't need to be there. If you store documents from investment
properties or securities, the rental can be claimed as a deduction for
income tax purposes. The box should not be used as a catchall for
souvenirs and unimportant papers.
What Goes In And What Stays Out
A guideline as to what goes in and what stays out of your safe deposit box
might be: Put it in if you can't replace it or if it would be costly or
troublesome to replace.
Many items can be replaced rather easily. Copies of insurance policies can
be obtained from your insurance companies. Copies of cancelled checks are
usually available at your bank. Generally speaking, you do not need to
keep the following in a safe deposit box: income tax returns, education
records, employment records, bankbooks, social security cards, guarantees,
and burial instructions.
Keeping Tax Records
How long should you keep tax records? The Internal Revenue Service has 3
years in which to audit Federal income tax returns.
However, this limit
does not apply in unusual cases. If you failed to report more than 25
percent of your gross income, the Government has 6 years to collect the
tax or to start legal proceedings. Also, there are no time limitations if
you filed a fraudulent return or if you failed to file a return.
But you don't have to keep everything for tax purposes. You can lighten
your record load by discarding certain checks and bills once they have
served their purpose. For example, you can throw away weekly or monthly
salary statements---assuming you are paid in that way---after you check
them against your annual W-2 Form.
But save cancelled checks that relate
directly to an entry on your tax return, and keep all medical bills for 3
years to back up your cancelled checks.
The IRS generally keeps records for 6 years. You can obtain a copy of your
tax return by writing to the IRS center to which your return was sent.
Make sure you include your social security number and a notarized
signature.
Making Household Inventory Records
Among your important papers keep a household inventory. If there is a fire
or burglary in your home, this record will help you remember what has to
be replaced and how much each item is worth. An inventory also may show
that you need to increase your insurance because your possessions are
worth more than you thought.
The best way to go about compiling a household inventory is to start with
a sheet of paper for each room in the house, apartment, etc. Forms on
which to record items are available from several places, sometimes from
your county Extension office.
When you make your inventory, start at one point in the room and go all
the way around, listing everything. For each item, list what it is, how
much it cost, when it was purchased, and what it would cost to replace it.
Include the model number, brand name, dealer's name, and a general
description. If you take pictures of the rooms and your household
possessions, it will make identification or replacement, easier. Arrange
expensive collections, silver, and jewelry separately and take close-up
pictures.
When you have finished all the rooms, including the basement, garage, and
attic, add up the total replacement cost. That figure will represent what
your household is worth and is what your insurance should cover.
Update your inventory every 6 months or so by adding new purchases and
adjusting replacement costs.
Organizing A Home Filing System
A system for personal records is a necessity. No matter how modest your
home facilities might be, you need a special place to keep your papers.
That could be as elaborate as a room or home office or as simple as a
corner of the kitchen, bedroom, or hall.
Records, regardless of the filing system used, should be reviewed at least
once a year to discard items no longer needed. January is a good time for
an overhaul, since it's just before you begin to work on taxes.
The equipment you will need doesn't have to be elaborate. Think about a
filing cabinet before you think about a desk. The two-drawer type can be
covered with paint or wallpaper. A wooden slab or hollow-core door
stretched across the top of two cabinets can make a practical home office
desk.
If you don't have space for a small cabinet, buy accordion folders, a
storage chest that fits under the bed, or get sturdy cardboard boxes of an
appropriate size.
A home computer or portable typewriter and a pocket calculator can be
handy, but they are not essential. The essential thing is to know where
everything is.
Two Home Files
You should keep two home files, in addition to your safe deposit box at
the bank. These two files are your active file and your dead storage file.
Your active file will hold:
1) unpaid bills until paid,
2) paid bill receipts,
3) current bank statements,
4) current cancelled checks,
5) income tax working papers. After 3 years, move these items to your dead
storage file. --- Be sure to hold to for 10 years.
There are other items which should always be kept in your active file.
These include:
1) employment records, such as resumes, recommendation
letters, health benefit information;
2) credit card information, including
the number of each card, by company name;
3) insurance policies;
4) copies of wills;
5) family health records;
6) appliance manuals and warranties;
7) education information, such as transcripts, diplomas, etc.;
8) Social Security information on benefits and regulations;
9) an inventory of what's in your safe deposit box (you might store a key in the inventory
folder).
Finally, keep a record book of the whereabouts of your important papers.
If you use a loose-leaf binder, you will be able to change papers easily
or copy a page or two.
The book should contain a list of all your savings and checking accounts.
This way you won't become one of the missing depositors who have forgotten
their accounts or who have died without telling relatives about them.
Also, include the name and branch of the bank where you keep your safe
deposit box.
The book also should have all of the family members' social security
numbers, and all of the insurance policy information.
It's a good idea to
keep a copy of your household inventory here as well.
Don't forget to
record all your household improvements.
Finally, make sure someone else knows and understands the family
record-keeping system.
Some things not covered in this list is a durable power of attorney and a medical power of attorney and a medical directive, this should be in your safe deposit box, a copy in your active file, a copy with a trusted blood relative as well as your spouse/significant other.
And directions for your funeral arrangements.
Preparing A Net Worth Statement
Have you tried filling out a net worth statement as a means of keeping
tabs on yourself and your family possessions? Such a record provides a
good overall picture and can be prepared in an hour or less. If you do it
annually, you can see quickly whether you are getting ahead financially or
falling behind and, in either case, how fast.
An accurate net worth statement can serve as a point of departure for the
year ahead. If you're not making as much progress financially as you had
expected to, you can decide whether to stay on course or to change
directions for the coming year.
Where are you going to find a net worth
form that will meet your needs? Try your county Cooperative Extension
Service office. Or ask at your bank. Better yet, perhaps you can make one
to fit your family.
All you do is list your assets, list your obligations,
and subtract the debts from the assets. Hopefully the plus side of the
ledger will get larger each year and the minus side smaller. But there may
be good reasons why you'll fall behind sometimes, such as when you buy a
new home or when other expenses are heavier than usual.
THINGS TO REMEMBER
Use the checklist chart below to remind yourself what to keep and what you
can discard.
Safe Deposit Box
Birth Certificates
Citizenship Papers
Marriage Certificates
Adoption Papers
Divorce Decrees
Wills
Death Certificates
Deeds
Titles to Automobiles
Household Inventory
Veteran's Papers
Bonds and Stock Certificates
Important Contracts
Active File
Tax Receipts
Unpaid Bills
Paid Bill Receipts
Current Bank Statements
Current Cancelled Checks
Income Tax Working Papers
Employment Records
Health Benefit Information
Credit Card Information
Insurance Policies
Copies of Wills
Family Health Records
Appliance Manuals and Warranties
Receipts of Items Under Warranty
Education Information
Inventory of Safe Deposit Box (and key)
Loan Statements
Loan Payment Books
Receipts of Expensive Items Not Yet Paid For
Dead Storage
All Active File Papers Over 3 Years Old
Items To Discard
Salary Statements (after checking on W-2 Form)
Cancelled Checks for Cash or Nondeductible Expenses
Expired Warranties
Coupons After Expiration Date
Other Records No Longer Needed see further above.
Julia Morgenstern in Oprah’s magazine for Sept 2004 gave this general guide of what to keep and for how long---
"How long should I keep certain papers?" It is
imperative that you check with your accountant and/or lawyer before throwing out
any financial or legal papers, because they know most about your individual
situation.
Here's a general guide of what to keep and for how long.
What to Keep and For How Long
Automobile records (titles, registration, repairs)—As long as you own the
vehicle(s)
Appointment books—1 to 10 years, depending on your comfort level
ATM slips—Maximum six years if needed for tax purposes
Bank statements—Maximum six years if needed for tax purposes
Credit card statements—Maximum six years if tax-related purchases on statements;
otherwise, until annual interest statement is issued by company
Calendars (past)—According to your comfort level and whether you use them for
reference or memorabilia
Catalogs and magazines—Until the next issue
Dividend payment records—Until an annual statement is supplied by company, then
just only annual statements
Household inventory and appraisal—As long as current, review at least once a year.
Insurance policies (auto, homeowners, liability)—As long as the statute of
limitations runs in the event of late claims
Insurance policies (disability, medical, life, personal property, umbrella)—As
long as you own it
Investments (purchase records)—As long as you own them
Investments (sales records)—Maximum six years for tax purposes could strech
to 10 years
Mortgage or loan discharge—As long as you own, or six years after discharge or 10
Receipts
Appliances—As long as you own the item
Art, antiques, collectibles—As long as you own the item
Clothing—For the length of the returns period, unless tracking your household
budget
Credit card slips—Until your statement comes and you can match purchases
Furniture—As long as you own the item in case repair is needed
Home improvements—As long as you own your home, or six years after sale
Household repairs—For life of warranty, or longer to reference reliability
record of service people and their rates
Major purchases—For the life of the item
Medical and tax-related—Maximum of six years to 10
Rent—Your canceled check is sufficient unless you make the mistake of paying
cash then it's best to switch to using a U.S. Postal Money Order and label it "Rent"
and get a receipt no matter what, demand it.
Utility bills—Your current bill and one previous year's to check billing
patterns
Warranties and instructions—For the life of warranty or the item. Stick label
with warranty expiration date and service repair number on bottom of appliance.
If something breaks down, you've got an easy way to check if the item's still
covered without even having to go to your file drawer.
Property bill of purchase—As long as you own the property
Résumé—As long as it's current
Safe Deposit Box key and inventory—As long as it's current
Tax records (bank statements and canceled checks, certificates of deposit,
contracts, charitable contributions, credit statements, income tax returns,
lease and loan agreements, loan payment books, pension plan records, pay
stubs)—The current year, plus six prior years to 10
Vital Records (Adoption papers, birth & death certificates, citizenship papers,
copyrights/patents, marriage certificate, divorce decree, letter of "Last
Instructions" to executor or heirs, medical illness and vaccination records,
passports, Power of Attorney, Social Security records, Wills)—Permanently
Now that you know how long to hang on to important papers, set up a file folder
system that works for you!
And every year you should do this---prepare a----
NET WORTH STATEMENT as of ________________
(update annually)
Assets
Cash on Hand$______________
Bank accounts (checking and savings)$______________
Credit Union account$______________
Savings & loan accounts$______________
Any other savings accounts$______________
House, market value$______________
Other real estate, value$______________
Household furnishings, value$______________
Automobile(s), blue book value$______________
Life insurance, cash value$______________
Stocks and bonds, today's value$______________
Profit-sharing or retirement plans$______________
U.S. Savings Bonds$______________
Money owed you$______________
Other assets or investments$______________
Personal property$______________
Total Assets$______________
Obligations
Mortgages, balance due$______________
Other loans (bank, credit union)$______________
Installment debts, balance due$______________
Credit cards, balance due$______________
Charge accounts, owed$______________
Other debts, total owed$______________
Insurance premiums due$______________
Taxes owed$______________
Other current bills$______________
Total Debts$______________
Net Worth (assets minus debts)$______________
Now a friend of mine has her active and inactive files in two 2 drawer cabinets, but she also invested in a 4 drawer cabinet because of her children’s information again label the cabinet drawers to cover each child.
Remember Darlings, you are the C.E.O. of your life and should you get married, of your family’s life.
Until Anon, Kisses Darlings
