Spring Cleaning for Your Estate Plan

Spring cleaning doesn’t just mean housekeeping and yard work — here, The Law Offices of Douglas C. Lauenstein provide tips on how to clean up your estate plan.

Many of us fall into one of two categories: we hold onto too many documents, or hardly any at all. When it comes to your estate, it can be difficult to know what to keep (and for how long), and what to throw away. Follow this easy breakdown to get a better idea on how to organize your records to ensure your estate affairs are in order.

Tax Records

Ideally, you should keep your tax returns and any other related documents for seven years, but at minimum hold onto them for three. If you have made contributions to nontaxable IRA’s, these records should be kept until the assets are sold. Estate tax returns from your parents, as well as gift tax returns, should be kept indefinitely, as they are crucial to future estate tax planning.

Additionally, any documentation on assets that are subject to capital gains or losses should, like IRA records, be kept until the asset is sold, and the taxes paid on them cannot be audited.

Vehicle Records

Keep any records related to your vehicle for the period for which you own the vehicle; you do not need records for cars you have donated or sold unless you plan to write off the donation off for tax purposes.

Loan Documents

Loan documents such as your mortgage should be kept, along with your last annual statement, until the loan is paid back and a statement is released. If a family member or friend has provided you a loan, keep records of the value of the loan and any payments you have made. Hold onto a record of liens on any assets you own until the lien is released.

Estate Planning Documents

If you have not created estate planning documents, spring is as good a time as any to do so. If you have, make a copy of your Will, Living Will, Trusts, Durable Power of Attorney, and Appointment of Health Care Representative, and put a note on the copies indicating where the original versions are stored. Hold onto the originals for life; keep them in a fireproof lockbox or safety deposit box at your bank. Make sure your attorney knows where your documents are being stored and how to access them.

Real Estate Records

Keep documentation on any property you own, including deeds, easements, agreements and insurance or survey records for the period in which you own the property. These files can be discarded after you sell the property.

Investment and Account Information

Most records pertaining to your bank accounts and credit cards can be discarded after a year, unless the IRS audits your taxes, in which case they should be held onto until the audit is over.

Any information pertaining to investments, as with bank account information, should be held onto for a year, unless your taxes are audited. Savings bonds should be held onto indefinitely.

Healthcare and Insurance Documentation

Keep your personal and family medical records, authorization to release healthcare information and a DNR order (if applicable) somewhere safe. Your insurance policy, contracts, pension documents and 401(k) account information should also be held onto indefinitely, unless a policy or account is closed or sold.

Marriage and Divorce Records

Keep your marriage license, divorce decree and property settlements indefinitely, as well as any prenuptial agreements.

In completing routine clean-ups of your personal and familial documents, you can ensure that accessing important documents can be streamlined when the time comes to update or plan your estate.  For more information on estate planning, or to schedule a consultation with an experienced estate planning attorney, contact The Law Offices of Douglas C. Lauenstein today.