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Elder Law and Estate Planning Blog - Lancaster, PA

Thursday, June 21, 2012

Keeping a Clean Desk

Even elder law and estate planning attorneys need help organizing papers.  With all the clients we see and all the documents we have, we often end up with piles of papers covering the desk.  While trying to get rid of several piles today, I came across an article in a Kiplinger's magazine on which documents you should keep and which can be safely trashed.

KEEP:  You should keep all of you old tax returns and supporting documents for three years after the filing date.  If you are audited, the IRS has the right to review tax returns filed in the past three years from the date of your most recent file.  This is known as the period of limitations and they also have the right to request supporting documentation for the income and deductions you reported during this time.

Also keep year-end investment statements and records of stock and mutual fund purchases for as long as you own them.  If you own a house, you should keep all records relating to that home, including proof of the purchase price and receipts showing the amount spent on improvements.  You can toss these documents after you sell the house.

Keep all files with information on contributions and withdrawals from IRAs and 401(k) plans.  This especially includes documents regarding nondeductible contributions so that you avoid paying too much tax on withdrawls.  For more information on how long to keep other financial records, visit BankRate.com's article.

TRASH:  Bank deposits, withdrawal slips and receipts from credit cards and ATMs can all be trashed after you check them against your monthly statement.  These guys keep coming, and nowadays most can be found online, so getting rid of them after comparing them to your statement is the smart move to keep clutter from piling up.  Another idea is to keep them only until the next one comes.  Keeping one on hand will ensure that you have one should you ever need it (for example we ask all nursing home planning clients to bring in their latest bank statements).  Also get rid of paycheck stubs after you check them against your Form W-2.

Unless you need them for tax purposes, trash monthly bills for utilities, cable and credit cards.  Again, these come monthly and keeping them all will just result in a big pile of clutter.  Make sure, however, before you trash something that it doesn't include your Social Security number, account numbers or other information you want to keep out of the hands of identity thefts.  If your documents include this information, you should shred them.

DIGITIZE:  Creating pdfs and scanning files to your computer is a great way to keep paper clutter down.  Our office has everything scanned to the computer so that the documents are easily searchable and accessible.  Smart phones are even coming out with apps that let you organize images of documents in secure, searchable archives (try the Shoeboxed app fro iPhone and Android).  You can then save these documents to a flash drive, an external hard drive, or a free, secure, online storage site.  One of my employees uses Dropbox.com to access files from her home computer and her laptop and loves the ease of its use.  Other similar programs include Manilla.com, Windows Live SkyDrive, Amazon Cloud Drive, and Apples iCloud.  All of these come with at least some space you can use for free and provide extra storage for a fee.  Manilla.com, however, provides unlimited documents to the site's secure database as long as you have an active account.

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