Eventually, the question will arise: What kind of paperwork should you keep?
The IRS can look back at your taxes for any reason for three years, and they can go back up to five years if they suspect fraud. After five years, the IRS has no jurisdiction over your return. So, in simplistic terms, you could dispose of anything that’s more than five years old from the last filing date.
We suggest actually keeping two more years of filings, or seven years total. After seven years, standing expires for some legal issues, and other information in your taxes may be helpful to have access to for a bit of extra time.
The rules are similar for investment attempts. If you’ve ended an investment, you should hold your paperwork for 3–5 years because of the potential for an IRS audit. If you experience one, you will want to have all information available without having to track it down or request it from your supplier.
After seven years, in my opinion, it’s clean- sweep time. Sort through everything and get rid of it! Those canceled checks you have from 20 years ago, affidavits, summons, taxes, and so on, lose their relevance after seven years. You can lighten your load, package up all the old paperwork, and bring it down next year when we have our shredding event.
In terms of your trust paperwork or wills, it’s important to understand that the last instrument you sign and date will be the one held up in court. In other words, if you sign a new will today, everything you signed previously is null and void. You don’t need to keep that paperwork, but you do need to keep your trust documents permanently. Never discard these, because you always want to have evidence of the original date when you started your trust.
How do you update a trust? Well, it depends on the type of trust you have. For a living revocable trust, if there’s a lot of information that needs to be updated, including tax-sensitive information or family information, it’s much easier to restate your trust. This means that you can keep the original date and name on the trust, but update any other information any time you want.
Some people have irrevocable trusts, which means that they’ve signed their assets into a trust and no longer have control over them. Since you’re giving up control, custody, and care over these assets for the rest of your life, you really want to make sure you’ve crossed all your t’s and dotted all of your i’s. Be sure to ask any questions you may have because the trust can never be changed.
As you look at your filing cabinets and all of those reports you kept over the years, it may
be time to lighten the load. Shredding all of the old paperwork disposes of your documents safely and ensures your information won’t be compromised. So, visit our shredding event and let us help you keep your records up to date.
In the future, we’ll be talking about Generational Vaults. With this tool, you can keep important documents online so you don’t have to store them in your house. (Though you certainly can keep hard copies, if you choose.) I’ll discuss this with you individually as we meet, but if you have questions about storing documents online in your electronic vault, give us a call at 616- 514-3314 or 800-536-8907 or visit us online at MattsonFinancial.com.
By the time you read this newsletter, we’ll have hosted our last event of 2021 — the new James Bond movie. This is the last Bond movie for Daniel Craig, and I have to say he hit it out of the park. He’s definitely a Bond I will miss. (I say this every time there is a new Bond and they do well. The only one I didn’t like is Roger Moore. Sorry, Roger.)
As 2021 closes, we look forward to hosting many more events. You can always check our website to see what events are coming up.
We appreciate you allowing us to be your advisor. Any time you have questions, please reach out to us so that we can give you the answers you need for a stress-free retirement.
–Gary Mattson