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  The Money Management Newsletter: General Interest
Good Records:
What to keep, what to toss

We stick them in shoeboxes, accordion files and overstuffed envelopes, all in the hope of being able to find our important papers and records should the need ever arise. But when the time comes, are you left sorting through ten-year-old receipts or trying to remember where you stuck that contract or agreement?

When it comes to organizing our records, many of us have great intentions but are guilty of plain laziness. What can start off as a small pile of paper and the thought "I'll just put this here for now and sort through it later" can quickly turn into a paper mountain and the realization "I'll never have the time to get through that". Out come the shoeboxes and away go the good intentions.

The keys to a good record organization system are really very simple. First, remember that it will take time and patience to sort through papers that have been accumulating for years. As a simple rule of thumb, it is wise to keep anything that you think is important or that you may need to refer to in the future. It is just as important however to make sure that you don't keep everything. Secondly, throw out any old papers that you no longer need. Not only are they taking up valuable space but they only add to the confusion when searching for something in particular.

The final key to good record organization, and perhaps the easiest, is to invest in the proper organization equipment. A filing cabinet is a great place to keep your replaceable records and the two-drawer variety will fit under a table or desk, which keeps it out of the way but still handy. Hard to replace records (including computer disks) can be kept in a fireproof home safe, which works much better than a plain metal box. While the metal boxes may look impressive, the protection they offer in a fire is virtually non-existent. For records that are irreplaceable, it is wise to looking into renting a safety deposit box from a bank. The boxes come in a range of sizes and are relatively inexpensive but provide the maximum amount of protection for items such as wills, house deeds and precious jewelry (check out Fiscal Agents Safety Deposit Box Fee survey at www.fiscalagents.com/rates/saf_box_sort.shtml).

Truthfully, good records can go a long way to simplifying your life. They also provide the security and comfort of knowing that your records will be left in perfect condition for your heirs. Each year in Canada, large portions of estates go unclaimed due to lack of knowledge of the existence of bank accounts, insurance policies and investments (visit the Interweb section of our web site at www.fiscalagents.com/knowledge/interweb.shtml for a link to the Foundmoney.com site). By organizing your records and important papers, you can ensure that your heirs get everything they are entitled to.

So now that you understand the importance of bringing your records to order, how do you get started? Below is a quick general guideline to follow on what to toss, what to keep, and where to keep it.

Home filing cabinet:

Keep records of anything to be claimed on your next income tax return. This may include receipts for charitable contributions, prescriptions that you have not been reimbursed for, and receipts for rent paid.

You should hang onto your income tax returns (and all relative receipts) for a minimum of seven years in Canada. This will ensure that you have the necessary information available if you are audited. Be aware however that the government can audit back even further than seven years if they suspect fraud.*

Retain your bank account statements for at least one year but check them for accuracy when you receive them and correct any errors promptly. Hold on to any receipts or cancelled cheques needed to prove any tax deductions and keep receipts that prove the value of home improvements or expensive household items (for insurance purposes). Hang on to your deposit slips until the deposits are noted on your monthly statement. Everything else can be discarded, including any cancelled cheques that are not needed for the above reasons.

Keep material related to your investments, including all annual statements and prospectuses. For those with brokerage accounts, keep all trade confirmations as well as the original brokerage agreement.*

Hold on to documents concerning your retirement plan(s). This should include any annual statements and information on the investments that you have chosen.*

Pay stubs should be saved for the current year until you receive the corresponding T-5(s) (for income tax). They can be tossed after that.

Other important documents and agreements, such as car leases, loan agreements, and mortgage contracts, should be kept in the filing cabinet for easy reference.*

Keep auto and homeowner's insurance policies along with any type of valid rental agreements. Old policies can be discarded when the statute of limitations has expired.*

Hang on to your credit card statements for at least six months to be used as reference in the case of a dispute arising over amounts paid. They can then be discarded. Also, be sure to keep the original credit card lending agreement and review your credit card statements for accuracy when you receive them.

Booklets and information on employee benefit plans and health and disability insurance should be kept. Be sure to include information on what is covered in addition to who and where to call if you have any questions.

Home safe:

Include your power of attorney, which allows another person to manage your affairs if you become incapacitated and are unable to do so.*

Your living will should also be included, which allows another person to make medical decisions if you can not.*

Your home safe should also contain instructions on where to find the keys for your bank safety deposit box (if applicable).

Bank safety deposit box or fire/flood-proof home safe:

Most importantly, include your will, trust agreements and cemetery deed.*

Documents proving marriage, divorce, birth, death, adoption, military service, child custody, citizenship, education, and technical or professional training should be kept here.*

Keep policies for life insurance and make note of any policies that your survivors might not think of, including accident insurance if you charged a travel ticket to a credit card.*

Include any deeds and titles, including those for property.

Proof of payment of debt or of money owed to you should be kept in the safety deposit box. This will prove beneficial if someone asks your survivors to pay off a debt again after your death or tries to renege on a loan agreement.

Keep all stocks, savings bonds and securities here.*

* * *
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© , Fiscal Agents Money Management Newsletter
25 Lakeshore Road, Oakville, On L6K 1C6.
(905) 844-7700

 





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