What Documents Do I Need to Keep?

You may have taken the opportunity during the last couple of months to work on your "do this someday" list. For some of us, that included sorting and organizing old papers and documents.

Organizing your personal documents is never a bad idea and it could result in purging some unnecessary documents and simplifying your life. One way to organize your documents is by dividing them into four categories.

Items such as ATM, bank-deposit and credit card receipts should be kept until they are reconciled with monthly statements. These documents can then be shredded, unless they are needed to support your tax return. You should always keep copies of your most recent insurance policies and investment statements. Copies can be shredded once new policies and statements arrive.

Loan documents should be kept until the loan is paid off. Titles of cars should be kept for as long as you own the car. Purchase confirmations of stocks, bonds and mutual funds should be kept until the investments are sold in order to establish the cost basis and the holding period.

All tax documents should be kept for seven years. If for some reason your gross income was not reported correctly on your tax return, the government has six years to collect the tax or start a legal proceeding.

Personal records such as birth certificates, death certificates, social security cards, marriage licenses, divorce decrees and military discharge papers should be kept forever. Other documents such as life-insurance policies, estate-planning documents and defined-benefit plan documents should also be kept indefinitely.

At Covenant Wealth Strategies we provide our clients with a highly secure digital vault called the Covenant Wealth Portal. Our portal enables our clients to easily store and organize their documents from any location.