Financial Documents-What to do With all This Paperwork?
You must have often hesitated over what to throw away and what to retain while sorting through bills, receipts, old checks and all sorts of financial documents that one accumulates.
Here are your answers!
Below is a quick checklist of what to keep, for how long, and where to keep it.
Read on and get organized.
First things first, there are some documents, originals of which you should preferably keep in your bank locker:
- Insurance policies
- Birth, marriage and death certificates
- HUF agreements, wills & trust documents
- Property deeds
- Titles to vehicles
- List of household goods with details of those covered by insurance, if any
- Certificates of financial instruments like bonds.
At your residence, you should have copies of these documents, one set with yourself at a location known to your spouse and/or child/parent and another person like your chartered accountant or lawyer and another set at a second location – with one of the above mentioned persons or your parents.
Filing of documents
In this computer age, most of our documentation comes via email and we may not print it most of the time. It may be filed in different folders in our inbox or hard disk. While this is fine, there should be a hard copy as well of all important document and they should then be filed in an organized and accessible manner.
Maintain separate files as follows:
- Bank accounts – Keep bank statements for 7 years. Go through your checks each year and keep those related to your taxes, business expenses, home improvements and mortgage payments. Dispose off those with no long-term importance
- Financial Assets
- Mutual funds – Keep the first statement showing purchase and there after only the latest statement. Unless capital gains issues are there, the documents can be disposed 7 years after being sold.
- Shares – Keep the contract notes and the dividend receipts; any communication regarding bonus/ rights issues received should be maintained as well.
- Fixed Income Securities – Keep the original document during the term of the investment + 7 years
- Insurance policies – Life of the policy plus 3 years.
- Physical Assets
- Land, property – besides the deeds, legal fees and commission paid claimed as expenses, cost of improvements and enhancements, lease agreement, rent receipts, house tax receipts should be filed and kept at least till 7 years.
- Vehicles – titles, insurance papers, pollution checks, servicing booklet
- Appliances – Keep the original bill definitely till the warranty period is going on. The manual should be retained always. If there is a service agreement that should also be retained for as long as the service period. File all the electrical appliances together.
- Personal papers like educational and work certificates should be kept in duplicate.
- Copies of birth certificates, marriage certificates and passport.
- Copies of wills and power of attorneys
- Tax – all returns filed till date. All documents supporting tax deductions for the last 7 years.
- Credit Card Statements – Keep statements if you are claiming any tax deductions against expenses made through the credit card else latest statement is enough unless some entry is under dispute.
- Medical records – all details and records to be maintained for each family member.
- To write on the cover of each file, the name and contact details of the person whose help you took for those particular transactions – your tax consultant, chartered accountant, financial planner, agent, bank relationship manager or a friend/colleague/relative.
- If there is a person whose advise you take regularly and constantly like your chartered accountant, your financial planner or a trusted aide, do mention that on the file cover so that if there is any ambiguity in the information, one knows who to contact to fill the gaps.
- To write on the first page of the file an index – simply what is there in the file and order in which the filing has been done – either chronologically or alphabetically. Lastly file the papers in such a manner that the next time your spouse/family member sees the files without knowing what is in them can still make sense of the papers.