What Important Records and Financial Documents to Save

When it comes to important paperwork, sometimes it can be difficult to know what documents to save and why. From financial documents, and insurance policies, to invoices and receipts, what do you need to hold onto and what can you toss?

INSURANCE POLICIES

Most insurance policies are different, but there are some that should be saved past their expiration date. Those may include auto, homeowners, and umbrella policies.

If you’ve picked up a lawsuit following an auto accident, a lawsuit that occurs during your policy isn’t required to be filed “until before the statute of limitations tolls.” Normally, the statute runs anywhere from 1-3 years, depending on where you are located.

Sometimes there are special cases in which a minor is involved. In this event, the open period for lawsuits is extended until the minor reaches 18 years old. Of course, there can be exceptions that will postpone the start date of the period of limitations, when a previous injury is discovered. For example, in continuing tobacco litigations, there are some liability policies dating back to the 1940s.

With this noted, it makes sense to save your insurance policy documents; with the most cautious individuals, most would save them for 21 years or longer.

INVOICES AND RECEIPTS FOR PAID BILLS

Any receipt or invoice that helps to corroborate a tax deduction should be saved. If you’ve purchased any expensive, keep those receipts. They will help with proving your claim with an insurance company. Additionally, you should keep appraisals that were used to establish value under an insurance policy. Receipts and invoices for any home improvement projects, such as a new roof, landscaping, etc., should be saved for tax purposes. They help to enhance the value of your home.

BANK & CREDIT CARD RECORDS

Bank and credit card records should be saved for at least 6 years, experts say, in case you were to get hit for proof of payment for any previous purchase. Any lawsuits that are filed due to breach of contract is usually not required by the statute of limitations until 6 years has ended; however, these laws vary from state to state. Some experts will say to add an extra year and also recommend saving cancelled checks and other related documents, for seven years. It also depends on how much space you have to save these documents.

EMPLOYEE BENEFIT PLANS, PENSIONS, AND OTHER FRINGE BENEFITS

By saving these records, you have documents to prove what benefits you are entitled to, to monitor any changes made to the plans, and to have a record of what you’re entitled to.

OTHER ADVICE AND INFORMATION

If you have complicated tax returns or extensive holdings, you may want to consult an accountant about record retention, and even potentially a financial advisor later on. If you decide to throw out any records, be sure to use a paper shredder, so criminals will not be able to get a hold of your personal information.