Do you know where your vital papers are? Are they up to date? If you keep good records, you won't miss important information for your taxes and could save money in the long run. If you get audited, you must produce accurate, up-to-date records. It could be quite costly to have an accountant reconstruct your records. In the event of an IRS audit, good record keeping could be a tremendous help in proving your claims. Your investments and retirement plan are easier to track if your records are in good shape. With a good record system, you will know where your warranty papers are and where the manuals for appliances are located. Going one step further, your heirs will have an easier time with your estate if you have good records and they know where these are located.
To get your records and documents organized, you might want to set aside a rainy or snowy week-end for the project.
What you will need
You will need a log book to record your documents. This can be a spiral notebook or a log book specially made for vital records. Boxes or envelopes for sorting your documents will make the process much easier. Be sure to have lots of pencils and it wouldn’t hurt to have snacks and order a pizza. The hardest part is going to be gathering together all your documents. This could take some time but it is a necessary step so jump right in and get them all together.
How to tackle the task
Start your organizational project by making a Master Document List. Here you will list all your vital papers. Once you have a master document list, you will want to make sure every document is up to date and then write down the location of the document. Some documents can be kept in files at home while others are safer in a safe deposit box. Now, you should list names, addresses and other information for your bank, credit cards, investments, insurance, mortgage, and so on. I think a section titled In the "Event of Death" is very helpful for your heirs. In this section, list any and all information about your estate and final wishes. You should double check your beneficiaries to be sure these are accurate. Now is also a good time to make sure your will is up-to-date and legal in your current state, especially if you've moved since you made out your will.
Your inventory
A record, including photographs, of your household inventory will help with insurance in the event of a fire or burglary. It’s also useful for tracking warranties and repairs. Record the make, model, and serial numbers along with date of purchase and possibly a description. Be sure to keep the sales receipt for the high cost items. Take photographs of individual items and store in an envelope along with the sales receipt.
Sharing your work
Once your documents are up-to-date and organized, be sure to share this with your spouse and adult children. You might also want to share with your attorney or administrator of your estate. A few minutes each month will keep your records organized or better yet, record the information immediately after a major purchase or change in status.