People loved personal information record-keeping tips that we shared in a recent seminar. Few people manage their personal business records properly, so this article gives record-keeping tips.
Why is Records Organization Important?
Many people more rely on memory than on written records, but what good is their memory after they die or suffer a disabling injury or illness? How will family members or friends know where to look for information if you don’t keep and organize important personal business records? In our experience, poor planning often delays big decisions and causes expensive problems.
What kinds of records should people keep and organize?
We cannot offer an exhaustive list of records, because the different kinds of information and records that may be important to people is limitless. To keep things simple, we suggest grouping personal business records into 7 basic categories:
• Identification. Identification includes driver’s licenses or ID cards, Social Security cards, Medicare and health insurance cards, and discharge and other military service-related records. Identification also increasingly includes website usernames and passwords.
• Relationships. Relationship records include marriage certificates (even for prior marriages), divorce decrees and property settlement agreements (even after remarriage); death certificates for deceased parents, spouses, and children; birth certificates for all close family members; adoption decrees for adopted children; and name change decrees for people who have changed their names.
• Assets. Everyone should maintain complete asset records for at least five years. Asset records include complete copies of insurance policies and annuity contracts. Other important asset records include account agreements and statements for all kinds of bank, life insurance, investment, and retirement accounts. Bank accounts often include certificates of deposit (CDs), money market accounts, and checking and savings accounts. Investment accounts may include business ownership interest, income-producing real estate, “non-qualified” deferred and immediate annuities, stocks, bonds (including corporate bonds, municipal bonds, and US savings bonds) and mutual funds. Retirement accounts may include IRAs, 401(k) plans, “qualified” or “IRA” annuities, Roth IRAs, deferred compensation plans, and all other kinds of plans that grow on a tax-free or tax-deferred basis.
• Income. Everyone should keep copies of income tax returns for at least five years. Every Social Security recipient should keep the most recent statement (usually delivered in the fall) of the next year’s Social Security cost-of-living adjustment. Income includes rent from rental properties; royalties from coal, oil, gas, minerals, patents, and copyrights; pensions; Social Security benefits; and income from current employment. It is also important to retain copies of records showing the source of income, such as copies of leases and all other related records regarding coal, oil, gas, or mineral interests.
• Past Gifts. We recommend that everyone keep complete gift records for at least five years, but some people question how anyone would know about past gifts. We answer by sharing recent stories of how government officials have discovered unreported assets and gifts. Official and creative use of computer systems gives them impressive abilities identify and track gifts.
Undisclosed gifts can trigger big nursing home expenses. We can help some families avoid problems and save thousands of dollars if they deliver complete gift records to us quickly.
• Estate Plan Documents. Powers of attorney are usually the most important estate plan documents. People that pre-plan funeral arrangements should keep complete copies of all signed documents regarding preplanned funeral goods and services permanently. Other important estate plan documents include deeds for real estate (especially deeds for transfers of tracts split off of current property), appointments of health care representatives, wills, and trust agreements.
• Your Other Important Information. Other important records include photographs, videos, genealogical records, and family stories. An old tool or piece of furniture may be nearly worthless, but a story about how an ancestor used the item can make it priceless. Time is a records organizer’s enemy. Procrastination creates at least three big problems. First, the longer that you wait to organize records, the bigger the task becomes. Second, the longer that you wait to recover a record that you have lost or destroyed, the more difficult or impossible it will be to get a copy of that record. Third, if you wait too long to begin organizing, you may not finish the job before the records become urgently important. Therefore, we encourage everyone to begin organizing today. The best way to eat an elephant is one bite at a time, and the best way to begin organizing is one record at a time.
About the Authors
Jeff R. Hawkins and Jennifer J. Hawkins have practiced in the areas of trusts, estates, and elder
law for over 26 years. Both lawyers are Trust & Estate Specialty Board Certified Indiana Trust &
Estate Lawyers and active members of the Indiana State Bar Association and National Academy
of Elder Law Attorneys. Both lawyers are admitted to practice law in Indiana, and Jeff Hawkins
is admitted to practice law in Illinois. Jeff is also a registered civil mediator, a Fellow of
the American College of Trust and Estate Counsel and the Indiana Bar Foundation; a member of
the Illinois State Bar Association and the Indiana Association of Mediators; and he was the
2014-15 President of the Indiana State Bar Association. Find more information about these and
other topics at www.HawkinsLaw.com. © Copyright 2018 Hawkins Law PC. All rights reserved.