Here’s a Quick Guide to Help You Purge Your Old Financial Documents

Spring is the perfect time to purge your closet—and the financial documents you’ve filed away over the years. But knowing what’s OK to throw out can present a hurdle. To help, here’s a cheat sheet to consider, with a breakdown by time period: keep forever, keep for seven years, and “revolving” documents.

Before we start, there’s an important rule: Don’t “throw away” any of these documents—shred all of them. If you don’t have a shredder, or if you have more to shred than you can handle, check with your bank. Many banks have a designated “shred day” when you can offload boxes of old documents to be securely destroyed.

1. Keep Forever (preferably in a fireproof safe or safety deposit box):

  • Marriage license
  • Birth certificates/adoption papers
  • Death certificates
  • Wills and other legal or permanent documents

2. Keep for Seven Years:

  • Records of paid-off loans
  • Tax documents:
    • Tax returns
    • Backup documentation (W2s, 1099s, charitable contribution records, etc.)
    • For many people, keeping three years of records may be adequate, but seven is the safe bet. If the thought of seven years of records makes you cringe, check the IRS website for specifics on your situation. For any year you haven’t filed a return, keep your records forever.

3. Revolving—Re-Evaluate Annually:

  • Active loan and insurance documents
  • Stock certificates (keep in your safe or safety deposit box)
  • Records for big-ticket items (such as appliances or jewelry) that are under warranty or are insured
  • Cost/purchase information:
    • This gets a little tricky because it’s tax-related. Be sure to keep purchase (cost) information generally related to your home, land or certain investments. Here’s why: when you sell an asset, you’re required to pay tax on the gain. For items purchased many years ago, it can be a nightmare to track down the purchase price, which could cause you to pay more taxes than necessary. Additionally, for assets such as your home, any improvements you’ve made may reduce taxes owed—but you’ll have to prove it. That’s why it’s important to keep documents relating to any home improvements.
    • Additionally, if you have records on investments (e.g., stocks and bonds) purchased before 2013 that you still own, keep the purchase records or provide them to your financial adviser or CPA for your file. Law changes from 2013 now require companies like Vanguard and Fidelity to maintain purchase price information. But for prior years, the onus may be on you to provide purchase price information needed to calculate the tax impact upon sale. For that reason, you don’t want to shred those records (but you may be able to offload them on a trusted professional!).
  • Household bills: generally, there’s no need to keep these documents after payment has cleared.

You likely have documents that are outside the scope of this listing, but hopefully, this provides a good place to start. Happy shredding!

 ​​​​The opinions expressed herein are those of PYA Waltman Capital, LLC, and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. This material should not be construed as tax advice. You should always consult with your tax professional with regard to specific tax questions and obligations.

PYA Waltman Capital, LLC, is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about PYA Waltman including our investment strategies, fees and objectives can be found in our ADV Part 2, which is available upon request. PYA-19-03