Financial Wellness Month: What Documents to Keep and What to Toss

Attend our Senior Financial Wellness event on Monday, January 14 from 6-7:30 p.m. RSVP here.

Are your file cabinets filled with old checks, bank statements, and pay stubs? While it’s sometimes tempting to keep every piece of paper in case you need it, there are documents you can go ahead and pitch.  Reducing that burden will help you better organize the documents you need to keep. While many financial and tax professionals will tell you shorter lengths of time to keep documents, they are ignoring the most important reason to keep financial documents, which is if you ever become disabled or need long-term care and need to file for Medicaid.  The current Medicaid Look-Back Period is 5 years, and the possibility of a 10-year Medicaid Look-Back Period is being studied by Congress, so at a minimum, all financial records should be kept for at least 10 years.  For tax and other reasons, some documents should be kept forever.
What to Keep, and for How Long?
·         Copies of tax returns. Keep copies of your tax returns for at least ten years.
·         Monthly and Year-end bank statements, mutual fund statements, brokerage statements, etc.  Keep all financial records for at least ten years.
·         Cancelled checks, check registers, old receipts. Keep for at least ten years.
·         Paper copies of credit card bills:  Keep for at least ten years.
·         Utility, phone, and cable bills. Keep for at least ten years if you have an adult relative living with you in your home.  Otherwise, you can ditch these as soon as your next bill confirms payment.
·         ATM withdrawal receipts and bank deposit slips.  Keep for at least ten years.  Mark on the ATM withdrawal receipt what the cash was used for.   If the deposit slip represents a gift of any sort, be sure to note it on the slip.
·         Receipts for home improvements. These should be kept until the property is sold. They are a great way to show potential buyers how much you’ve spent to upgrade the property, and are required to show capital improvements you’ve made for capital gains tax purposes when your house is sold.
·         Real Estate Documents. Keep original (recorded) Deeds, HUD-1 Settlement Statements, Title Insurance Policies, Promissory Notes, Real Estate Contracts, and Certificates of Satisfaction (sometimes called Mortgage Releases) forever, even on properties that you no longer own.    Other real estate documents can be disposed of once you have sold the property.
·         Car and Boat Documents.  Keep titles, registration, and sales documents for at least ten years.
·         Receipts for big ticket items. Receipts for jewelry, rugs, appliances, antiques, cars, collectibles, furniture, computers, and other expensive items should be kept in an insurance file for proof of their value in the event of loss or damage.
·         Retirement documents. Keep these forever. These include IRA contribution records.
·         Stock and fund purchase records. Keep these for as long as you hold those investments, and for at least ten years after you dispose of these investments.
·         Life insurance. Policy documents should be kept until the terms are fulfilled. This means that you should keep these until you die or until the term ends if you have term life insurance.
·         Defined benefit plan documents. These should be kept forever, even if you no longer work for the company.
·         Gift Receipts.  Medicaid penalizes all gifts made within the Medicaid Look-Back Period, so records of all gifts that you make should be kept for at least 10 years.  If you are over 65 or disabled, see this video and article about the Perils of Gifting.
·         Paystubs.This one financial record you don’t need to keep for 10 years.  You can shred your paystubs each year as soon as you receive your W-2 for that year.
·         Estate planning documents.Your Powers of Attorney, Advance Medical Directives, Revocable Living Trustor Living Trust Plus™, Last Will and Testament, and Incapacity, Estate Planning, and Asset Protection documents should be kept forever, but should be reviewed regularly — we recommend annually, but at least every three years. At the Law Firm of Evan H. Farr, P.C., we offer a service called DocuBank, to ensure that that important legal documents will be there when you need them most, such as when you are hospitalized. DocuBank is an electronic storage and access service for healthcare directives. Learn more about DocuBank. 
When You Do Let Go, Shred It
Shredding is the best option to keep account numbers and other information safe from identity thieves.  
To learn important tips about senior financial wellness while enjoying delicious refreshments, attend our upcoming Senior Financial Wellness Seminar on January 14 from 6-7:30 P.M. at the Fairfax and Fredericksburg Elder Law Firms of Evan H. Farr, P.C. office.  RSVP here.
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About Evan H Farr, CELA, CAP

Evan H. Farr is a 4-time Best-Selling author in the field of Elder Law and Estate Planning. In addition to being one of approximately 500 Certified Elder Law Attorneys in the Country, Evan is one of approximately 100 members of the Council of Advanced Practitioners of the National Academy of Elder Law Attorneys and is a Charter Member of the Academy of Special Needs Planners.

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