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Spring Cleaning from an Estate Planning Perspective

Estate Planning, Estate Planning Attorneys, Tax, Capital Gains, Loan Documents, Warranties, Real Estate, Bank Records, Investment Accounts, Health Care, Life Insurance, Retirement, Marriage, Divorce

Springtime after a long, cold winter means it is time to discard unwanted papers and clutter.  As we age, we tend to hold onto things longer and the piles multiply.  It is difficult to decide what to discard.  Although you may have other reasons for holding onto certain items, in the spirit of spring cleaning, we offer the following guidance on what to keep and what to discard from an estate planning perspective:

1. Tax Records:  Keep income tax returns and backup documentations for at least three years after filing, preferably six years because of the risk of an audit  uncovering a substantial error.  Keep records of contributions to nontaxable traditional IRAs until the assets are sold.  Keep gift tax returns and your parents’ estate tax returns indefinitely because they can be crucial documents in future income and estate tax planning.

2. Cost Information:  For assets subject to capital gains or losses such as your home or your investments, keep cost data until the asset is sold and the income or estate tax return reporting the sale is no longer subject to audit.

3. Vehicle Information:  Keep records of the purchase, registration, title and lien release for as long as you own your vehicle; discard information on cars you have sold or donated.

4. Loan Documents:  Keep the Note, Mortgage or Security Agreement and the last annual statement until the loan is paid off and the mortgage or financing statement is released; if the loan is from a family member, keep the amortization schedule and your record of payments made; keep any copy of liens on your home or business real estate until the lien is released.

5. Warranties:  Keep them as long as the warranty is in effect; discard old warranties and warranties of products you no longer own.

6. Estate Planning Documents:  Keep a copy of your Will, Trusts, Durable Power of Attorney, Appointment of Health Care Representative, and Living Will with a note on where the originals are located.  Discard superseded estate planning documents. Put the original Will and Trusts in your safe deposit box or a fire-proof safe at home.  Put more than one person on the safe deposit box so a court order isn’t needed after you die to get into the box.  Let your attorney know the location of the documents and the safe key or combination to get access to them.

7. Real Estate Documents:  Housing, land and cemetery deeds, time share deeds, easements, and road maintenance agreements should be kept with copies of any title insurance and surveys.  Discard paid off mortgages and liens.  Keep real estate appraisals completed at the time of any gift or any death.

8. Bank and Credit Card Records:  Keep recent bank account statements, credit card statements, safe deposit box inventory and location.  Discard bank statements, credit card statements, pay stubs and receipts after one year unless needed as part of tax records or to resolve a disputed item.

9. Investment Accounts:  Keep brokerage statements, mutual funds, IRA statements for one year.  Discard them after one year unless needed as part of tax records.  Keep savings bonds either in the safe deposit box or at home with your important papers.

10. Health Care:  Keep your personal and family medical history, Appointment of Health Care Representative, authorization to release health care information, Living Will or DNR order. Discard Explanation of Benefits from Medicare or other health insurance providers after filing your income tax return.

11. Life Insurance and Retirement:  Save life insurance policies, annuity contracts, 401(k) accounts and Summary Plan Descriptions, and pension documents.   Discard the policies and account statements for those that have been sold or closed.

12. Marriage and Divorce:  Do not discard your marriage license or, if applicable, divorce decrees or property settlement agreements.  Keep your premarital agreement unless revoked by written agreement.

Springtime is a great time to organize and clean your home.  Make this spring the time you discard what is unnecessary and keep those important documents listed above.

About the Author

In his 30 years in practice, Joe has become a leader in the trust and estate and elder law field. He is a Fellow in the Amercian College of Trust & Estate Counsel (ACTEC). He serves on the Executive Committees of the Estates & Probate Section and the Elder Law Section of Connecticut Bar Association (CBA). He has served as chair of the continuing legal education committee of CT-NAELA and the CBA Elder Law Section. Joe has led many seminars for CT-NAELA and the Elder Law Section on topics as diverse as evidence in conservatorship proceedings, special needs planning in the family law setting, veterans’ benefits, and home health care strategies.