Spring cleaning is great for your junk drawer and extra closet… and the financial documents you’ve filed away over the years. But, knowing what’s okay to throw out can present a hurdle. To help, here’s a cheat sheet with a break down by time period—keep forever, keep for seven years, and “revolving” documents.
Before we start, there’s an important rule: Don’t “throw away” any of these documents—shred all of them. If you don’t have a shredder, or if you have more to shred than you can handle, our clients are always welcome during business hours to bring by files for free shredding. Or, check with your bank. Many banks have a designated “shred day” when you can offload boxes of old documents to be securely destroyed.
Keep Forever (preferably in a fireproof safe or safety deposit box):
- Marriage License
- Birth certificates/adoption papers
- Death certificates
- Wills + other legal or permanent documents
Keep for Seven Years:
- Records of Paid Off Loans
- Tax Documents:
- Tax Returns
- Backup documentation (W2s, 1099s, charitable contribution records, etc.)
- For many people, keeping three years of records may be adequate, but seven is the safe bet. If the thought of seven years of records makes you cringe, check the IRS website for specifics on your situation. P.S., for any year you haven’t filed a return, keep your records forever.
- Active Loan and Insurance Documents
- Stock Certificates (keep in your safe or safety deposit box)
- Records for Big Ticket items (such as appliances or jewelry) that are under warranty or are insured
- Cost/Purchase Information:
- This gets a little tricky because it’s tax related. Be sure to keep purchase (cost) information generally related to your home, land or certain investments. Here’s why—when you sell an asset, you’re required to pay tax on the gain. For items purchased many years ago, it can be a nightmare to track down the purchase price, which could cause you to pay more taxes than necessary. Additionally, for assets such as your home, any improvements you’ve made may reduce taxes owed—but you’ll have to prove it. That’s why it’s important to keep documents relating to any home improvements.
- Additionally, if you have records on investments (e.g., stocks and bonds) purchased before 2013 that you still own, keep the purchase records or provide them to your financial advisor or CPA for your file. Law changes from 2013 now require companies like Vanguard and Fidelity to maintain purchase price information. But for prior years, the onus may be on you to provide purchase price information needed to calculate the tax impact upon sale. For that reason, you don’t want to shred those records (but you may be able to offload them on a trusted professional!).
- Household bills: generally, there’s no need to keep these documents after payment has cleared.
You likely have documents that are outside the scope of this listing, but hopefully this provides a good place to start. Knowing your documents are in order and safely stored or disposed of could be your next step towards peace of mind. Happy shredding!
PYA Waltman Capital, LLC (“PYAW”) is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about PYAW’s investment advisory services can be found in its Form ADV Part 2, which is available upon request. PYA-23-16.