How to Handle Paperwork for Estate Planning

People seem to fall into one of two categories when it comes to papers and records: (1) the hoarder, who keeps everything forever and (2) the minimalist, who throws everything away as soon as it is dealt with, such as paying a bill.  When it comes to estate planning, the best system falls somewhere between these two.  When you have named someone as executor or trustee, you want them to able to find what they need in your records, but not be overwhelmed by boxes or piles of useless papers.

The most important thing to know in making decisions of what to keep is what is required or recommended for different types of documents.  Some can be discarded after only a short period of time, while others should be kept, and carefully filed, for a lifetime.  Then in between come items that could be useful for a set period of time.

The last category will include your tax records. Because the IRS has seven years to conduct an audit, it would be wise to keep your last seven years of tax records easily accessible.  You may also want to keep other financial records for at least five years because programs such as Medicaid will ask for this information should you file for benefits.

Documents that can be kept for a year or so and then shredded would include paystubs, credit card statements and bank statements.  If you do need these later, they are fairly easy to request from their source.  Do be aware, however, that if a bank, brokerage firm or utility company is acquired or merged, it may be more difficult to get these documents by request.

Finally, some documents should be kept forever for the convenience of those who handle your estate.  Wills, life insurance policies, deeds and mortgages should always be readily available and those responsible for them after your death should know where they are.  If they are in a safe deposit box, be sure that the person who will need them has access to the box.

Some of these tasks may be easier these days with much of this information available online, but, again, your executor or trustee may only be able to access these online accounts if they have your passwords.  So make sure that these are either included with your will or give them to the responsible person before you are gone.  All of these tips will make it easier to make sure that your estate is administered easily and that it is distributed as you intended.