How Long Should You Keep Financial Records?

When Kelly first came to FAI Wealth Management, she was drowning in paperwork. She had been told to keep important documents anywhere from one year to forever! Kelly was feeling overwhelmed by this mountain of records. She was downsizing and asked her FAI advisor if it was smart to get rid of some of these documents as she prepared to move to her new home.

Below, is an outline the advice we gave Kelly. These rules-of-thumb will help you keep the right amount of paperwork on hand for filing taxes or applying for a loan but should help keep the mountain of paperwork under control. Keep in mind that some government agencies and institutions will require original paper documents, while some will accept a digital scan. We note the documents that must be kept as originals with an asterisk (*).

FINANCIAL RECORDS

KEEP DOCUMENTS UNTIL

* Tax Documents

Tax returns
Income: Form W-2, Form 1099, Form K-1
Supporting documents including deductions claimed, charitable receipts, mortgage interest payments, etc.

7 years after filing tax return

* Personal Property (real estate, cars, boats)

Deeds, titles, bills of sale
Expenses incurred in sale or purchase, such as legal fees and agent commissions
Substantial remodeling projects and additions

Duration of ownership + 7 years after sale of property

Investment Documents

Annual account summaries
Records of purchases and sales of securities
Form 1099, Form 2439 (long-term gains)

Duration of ownership + 7 years after claiming gains or losses on taxes

Loans And Current Expenses

Mortgage statements
Credit card balances
Utility bills

Keep most recent statement

Insurance Policies

List of policy numbers
Copy of policies

Until policy expires and all claims are settled

* Personal Documents

Birth Certificate; Social Security card
Driver’s license; passports
Adoption papers
Marriage license; divorce agreement
Military service records

Permanently; update as needed

* Estate Documents

Will
Trust documents
Powers of Attorney
Medical Directives

Permanently; update as needed

We recommended that Kelly set up a secure space in her new home to store her records. The documents you keep should ideally be stored in a secure location that is protected from natural disasters and burglary, such as a fireproof safe or safe deposit box. You want to be sure you and your personal representative have easy access to them.

For the documents that you can be disposed of, shred anything that contains personal information. FAI clients are provided free shredding services. Give Hillary a call at 410-715-9200 to let her know you’re coming by with papers to shred, and she may be able to schedule a time for you to see your advisor while you’re at the office and share the joy of unburdening yourself of a load of unneeded paper.