What counts
Important papers fall into three groups, and each is handled differently.
- Identity and status papers are kept forever in the original: birth certificate, Social Security card, passport, marriage certificate, divorce decree, adoption and naturalization papers, and military discharge.
- Ownership and obligation papers are kept as long as the thing exists: house deed, vehicle titles, loan documents, leases, insurance policies, and records of home improvements, which reduce the taxable gain when you sell.
- Legal instructions are your will, your powers of attorney for finances and health care, and your living will.
How long to keep the rest
The IRS generally has three years from filing to audit a return, and six if income was understated by more than a quarter, so keeping supporting records for seven years covers both. Keep the returns themselves indefinitely, since they are small and they prove your earnings history. Keep pay stubs until you have checked them against your W-2, investment statements showing purchase prices until after you sell, and medical bills and insurance explanations for at least a year after the matter is settled. Utility bills and online bank statements can go. Shred anything bearing an account number or a Social Security number.
Where it lives
A fire-rated, water-resistant box or small safe at home holds the originals you may need quickly. A bank safe deposit box suits things needed rarely, though not the only original of your will or powers of attorney, since access to the box can be restricted after a death or while you are incapacitated. Scan every document, store the scans in an encrypted folder with a backup in a second location, and use a password manager with an emergency-access feature for the logins.
The master sheet
Write one or two pages and update them every year.
- List every financial and insurance account by institution, with only the last four digits of each number.
- List the recurring bills and how each one is paid.
- Name your doctor, lawyer, accountant, insurance agent and the benefits contact at your employer.
- Say where the originals, the safe key and the password manager instructions are kept.
- Note anything a stranger to your life would need, from the pet's medication to the storage unit.
Give a copy to the person you have named as your agent or executor, and show them where the box is.
Tip Keep your Social Security card out of your wallet and keep passwords off the master sheet. The sheet says where things are, and the password manager holds the keys.
