Spring Cleaning Your File Cabinets

April 3, 2018

With warmer weather, more sunshine, and opening day baseball (Go White Sox!) on the horizon, I was feeling ambitious last weekend and decided to get a jump start on my Spring cleaning. As I sifted through file cabinets I was shocked as to how many statements, bills, and receipts can pile up over 12 months, and it got me thinking, “What should I keep and what can go straight to the shred machine?” It’s hard to determine what paperwork is necessary to have on file in today’s digital world, but here’s a helpful list of some items that you may want to hold onto before tossing them in the trash.

Tax Returns:  Whether you have these stored electronically or on paper, the I.R.S. expects you to keep your completed tax returns and any supporting documentation for each return on hand for three years after your filing date. This includes receipts for charitable contributions, or purchases made for your small business. However, the I.R.S. does not require originals for such receipts, so you can save yourself some space by scanning these to an electronic file for future reference. If you work with an accountant, you may be able to rely on them for these materials, but keeping a copy for yourself can’t hurt.

Estate Plans & Life Insurance Policies:  Keep any original estate planning documents including wills, trusts, and powers of attorney on hand, as post-mortem decisions could be challenged by family members. Although it may not be the most convenient option, placing your original estate plan in a safety deposit box will ensure the documents are not lost due to theft or destruction. It’s also important to hold copies of all major insurance policies, such as life, medical, and homeowner’s. Keep notes on who the beneficiaries of your life insurance policies are, as well as any retirement accounts.

Other Important Items:  Aside from the primary documents listed above, there are other forms that you may want to keep on hand, if they are applicable to you. Any legal documents such as marriage licenses, divorce papers, birth certificates, and social security cards should be kept. You’ll also want copies of any deeds, mortgages, or bills of sales referencing your home. Receipts for major purchases like TV’s, furniture, or home appliances are also helpful, and come in handy for insurance purposes and product warranties.

Although most of the documents referenced in this article can usually be provided electronically, you shouldn’t rely on the digital copy as your final backstop. Technology is not always reliable, and keeping physical files relating to the most important financial transactions in your life can help relieve unnecessary stress and anxiety.

Sean Knoerzer is an Advisor at BDF where he enjoys digging deep into the details of a client’s financial plan. He sits on the firm’s Financial Planning Committee, which is responsible for educating the BDF team on financial planning topics and improving the team’s planning process. He earned a Bachelor of Science in Agriculture and Consumer Economics with a concentration in Financial Planning at the University of Illinois. Sean is a CERTIFIED FINANCIAL PLANNER™ professional.