500 Newport Center Drive, Suite 500
Newport Beach, CA 92660
Phone: (949) 721-2330
Fax: (949) 721-0734
March 2008 
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When Can I Divorce My Files?
By the Tarbox Group Team - June 2008
Drowning in paper? Trying to decide what to keep or what to throw away? You're not alone.
Our clients often ask for advice as to what paperwork they really need to keep, what they should shred, and where important papers should be stored.
Moving from a shoebox storage system to a well-organized one, in which only crucial documents are kept, benefits one in a variety of ways. First, reducing clutter can create a sense of well-being. Second, it will make tax time a less-daunting proposition. Third, it can provide you with a more accurate snapshot of your overall financial position, which allows us to spot planning opportunities. And, finally, if you were to die or to become incapacitated, the individuals who will take the reins afterwards will appreciate you forever.
So, where do you start? Start by sorting your paperwork into three piles:
1. "Until death do us part" pile.
2. The "yesterday's news" pile.
3. The "somewhere in between" pile.
The chart below will assist you in making these determinations. Put the "until death do us part" pile in your safe deposit box, generally. You might consider scanning these documents and storing them on CDs, in addition to hanging on to the paper copies. The CDs could go into a fire safe box or into your safe deposit box.
Make a decision on any documents that fall somewhere in between and file them in the appropriate location. Crosscut shred "yesterday's news" so you can avoid the hands of identity thieves.
PERSONAL |
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Document |
When To Shred |
Where to Keep |
| Birth Certificates | Never | Safe Deposit Box |
| Death Certificates | Never | Safe Deposit Box |
| Marriage Certificates | Never | Safe Deposit Box |
| Divorce Agreements | Never | Safe Deposit Box |
| Military Discharge Papers | Never | Safe Deposit Box |
| Social Security Card | Never | Safe Deposit Box |
| Adoption Papers | Never | Safe Deposit Box |
| Naturalization Papers | Never | Safe Deposit Box |
BANKING |
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Document |
When to Shred |
Where to Keep |
| Bank Account Statements | After one year | Home |
Canceled Checks For purchases of high-value personal belongings For tax payments
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After one year Until sale or disposition 6-10 years
|
Home Home
Home - with the particular tax return or current tax file Home - in your retirement account file Home - in your file containing your home purchase documents |
Credit Card Statements |
After one year unless you need them as spending records for tax documentation |
Home |
| Loan Documents | When loan repaid | Home |
| Loan Discharge Notices | Never | Safe Deposit Box |
| Pay Stubs | When you get a new one or until you match with W-2; keep the last one from a previous employer if changing jobs | Home |
INVESTMENTS |
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Document |
When to Shred |
Where to Keep |
| Monthly Account Statements | When you get a new one | Home |
| Quarterly Statements | When you get a new one | Home |
| Year-End Statement | 6-10 years after receipts | Home - either in your current year tax files or in your investment account file |
| Trade Confirmations | Shred or choose to receive electronically if from the Tarbox Group, Inc.; otherwise, for 6-10 years after you have sold the investment | Home |
| Savings Bonds | When you redeem | Best to convert to electronic bonds at the U.S. Treasury. Otherwise, safe deposit box with a list of serial numbers at home. |
| Stock Certificates | Should not be held | Move them into an investment account, if they company is publicly-traded |
| Real Estate Contracts | Never | Home; if you still own the real estate, keep the records in your files, otherwise, in storage |
| Real Estate Improvement Receipts | For at least three years after property is sold | Home; for use in tracking the tax basis of your home |
| Real Estate Deeds | When property is sold | Safe Deposit Box; copy at home |
| Real Estate Settlement Statements | 6-10 years after the property is sold | Home - for use in calculating your tax basis upon sale; then, in your archived tax files for the year of sale |
RETIREMENT |
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Document |
When to Shred |
Where to Keep |
| Social Security Statements | When you get a new one | Home |
| Enrollment Forms from Employer | Never, unless you rollover the account | Home |
| Copies of Beneficiary Designations | When updated | Home |
| Statements (401(k), IRA) | When you get a new one | Home |
TAX |
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Document |
When to Shred |
Where to Keep |
| State and Federal Tax Returns and supporting documentation | 6-10 years | Home; current year in files; previous years in storage |
| Form W-2 | When you begin receiving Social Security benefits | Safe Deposit Box |
| Casualty Loss/Insurance Reimbursement Paperwork for your Home | 6-10 years after you dispose of your home | Home - with the other documentation for calculating basis in your real estate |
| Form 709, Gift Tax Return | Never | Safe Deposit Box; you'll need it when your executor files your estate tax return upon your death |
| Form 706, Estate Tax Return | Never | Safe Deposit Box; you'll need this to determine tax information pertinent to inherited property such as tax basis |
ESTATE |
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Document |
When to Shred |
Where to Keep |
| Will | When updated | Original in safe deposit box; copies at home and with executor and attorney |
| Living Trust | When updated | Original in safe deposit box; copies at home and with trustee or successor trustee(s), attorney |
| Advance Health Care Directive | When updated | Original in safe deposit box; copies at home and with doctor, attorney and any named agent(s) |
| Power of Attorney | When updated | Original in safe deposit box; copies at home and with current agent, successor and attorney |
INSURANCE |
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Document |
When to Shred |
Where to Keep |
| Annually-renewed insurance policies | After renewal | Home |
| Insurance Inventory | When updated | Safe deposit box; copy at home |
| Permanent Life | Never | Safe deposit box; copy at home |
| Term Life | After the term expires | Safe deposit box; copy at home |
| Long-Term Care | Never | Safe deposit box; copy at home |
| Annuity Contracts | Upon termination | Safe deposit box; copy at home |
PRODUCT PURCHASES |
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Document |
When to Shred |
Where to Keep |
| Car Title | When you sell your vehicle | Safe Deposit Box |
| Receipts | When warranty expires or in a separate file for insurance/tax purposes | Home |
| Warranties | When expired | Home |
Clients often ask us how long to keep tax returns. It all depends on your situation. The IRS has three years to audit a return and the California Franchise Tax Board has four years. However, the IRS has six years to pursue you for underreporting of income. Beyond that, the IRS can pursue you at any time if there is some prospect that fraud has been committed.
So, you decide. A conservative recommendation would be the 6-10 years listed above. If you would like to read more about how long the IRS recommends you keep documentation for tax purposes, you could consult IRS Publication 552.
Please note that these are general guidelines. Individual comfort levels (and storage capacities) vary, so take these guidelines and implement them as you feel comfortable.