How Long to Keep Financial Documents and When to Discard Them

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How Long to Keep Financial Documents and When to Discard Them

Most people hold onto boxes full of financial records, tax returns and pay stubsthey no longer need. And they don't always keep the records they do need. 

Here are guidelines on what you need to keep, and for how long.

  • Estate-planning documents: will, power of attorney, advance health-caredirective ("living will") and health-care proxy. Store them in a safe-deposit box,but don't put them there and forget it. They should be reviewed every five years.If you make any changes, be sure to discard the outdated document and keep onlythe current version to avoid possible confusion. Make sure that the executor ofyour will and/or the person who holds your power of attorney knows the locationof your safe-deposit box key.
  • Tax returns: Keep state and federal tax returns and supportingdocuments for seven years.
  • Paperwork on charitable donations: Keep for seven years. If you'reever audited by the Internal Revenue Service (IRS), you'll need a bank record (acancelled check or credit-card statement) or a written receipt from the charitythat gives the name of the charity, the date of the gift and amount. However, fornon-cash gifts, you must keep a written receipt from the organization for sevenyears.
  • Stock certificates: Never hold them yourself - not even ina safe-deposit box. All certificates should be kept by a broker like Schwab, Merrill,Fidelity, etc. If you have paper certificates, contact your broker to arrange fortransfer. 
  • U.S. Savings Bonds: Convert them to electronic bonds at the U.S.Treasury or keep them in a safe-deposit box, with a list of serial numbers at home. 
  • Cancelled checks: Keep for one year in most cases. Discard checks,check registers, check statements and credit-card statements after a year. However,keep checks and credit-card statements needed to support tax filings seven years. 
  • Loan-discharge notices: Keep "forever" in a safe-deposit box. Whenyou sell your home, you may find that a previous lender failed to record that youpaid off your mortgage. To avoid a big hassle, you'll need written proof. 
  • Birth and death certificates, marriage license, military discharge papers,Social Security card, and permanent life insurance policies: Keep theseforever.   

Paperwork Retention Guidelines

The following table is based in large part on a similar table produced by ConsumerReports .

Paperwork Retention Guidelines

FPA member Abigail Scandlen, CFP®, is an Analyst at Brinton Eaton, awealth advisory firm based in Madison, N.J.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright © 2010 FPA All Rights Reserved


This article appears in: Personal Finance , Taxes

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