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Getting finances in order
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September 14, 2001: 7:36 p.m. ET
Organized records can ease a family's burden following one's demise
By Staff Writer Jeanne Sahadi
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NEW YORK (CNNfn) - Losing a loved one is hard enough. But grief is often compounded when one's financial and life-planning records are in disarray.
Keeping organized records is a gift to your family and to yourself. It helps ensure that your wishes are followed, that your assets are accounted for, and that your money is available to meet your family's needs in a timely fashion.
Following is expert advice on what you need to keep on file, how long to keep it and who should get copies.
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 FIRE-PROOF YOUR PAPERS
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Consider buying a fire-retardant box or safe to file important financial documents and insurance policies that you keep at home.
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Tax records: These include any forms and statements that show income or verify deductions (W-2s, 1099s, canceled checks, receipts, etc.), as well as copies of your return. Keep them for a minimum of three years. That's typically the amount of time the IRS has to audit a return, and sometimes three years of tax records are required for an estate audit, said estate planning attorney Roger Levine of Levine Furman & Smeltzer in East Brunswick, N.J.
To be safe, however, experts recommend you keep them for six years, since that's the time the IRS has to audit a return if you underreport your gross income by more than 25 percent, said Cindy Hockenberry of the National Association of Tax Practitioners.
Homeowner records: The deed and title to your house, your closing and mortgage statements, and any receipts documenting how much you spent on home improvements should be kept indefinitely. These will help you – or your heirs – track the house's value (and appreciation) when it's sold.
Investment records: Retirement and brokerage account statements, especially those indicating purchases, distributions and stock splits, should be kept indefinitely, since they create a paper trail of your investments, and they can be used to determine the cost basis when you sell your stocks or funds. They also help your heirs trace the origins of an investment if you bequeath it to them after you die.
Insurance records: You should keep records of your insurance policies – life, health, disability, auto, homeowner, liability, etc. – for at least as long as the policy lasts, and possibly longer if you've arranged for tail coverage, which covers you for a certain period after policy expiration.
Other relevant documents: Your birth certificate, marriage certificate, divorce decrees, and military records should be kept indefinitely.
Life- and estate-planning documents: You should always make sure you have on file an up-to-date copy of your will, your living will, your healthcare proxy, and your power of attorney documents.
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COPYING A WILL
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When copying an original will, never remove the staples. If the original will appears to be tampered with, its validity may be questioned in probate court.
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You should keep the original of your will. Or, if you prefer, you can give it to your lawyer for safekeeping so long as you keep a copy in your files and indicate on that copy where the original can be found. You needn't give a copy of your will to your executor unless you wish, although you should let him or her know where it is, Levine said. And you shouldn't give a copy to your heirs. It's a private document, and you may wish to choose other heirs at a later date.
If you've set up a revocable trust in which you're the trustee, give a copy of the trust to your successor trustee or make sure he or she knows where it is.
Give a copy of your health-care proxy and your living will to your general doctor and to the person you named as your medical agent. You might also consider giving a copy to a close friend or trusted neighbor, if you don't live near your family or medical agent, Levine suggested.
If you've assigned power of attorney to someone, that person should know where the document can be located in the event that it's required.
Make a locator list
One of the most useful things you can do for your family is create a list of where all your accounts, policies and other valuable documents are located.
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WHAT TO KEEP IN A SAFE-DEPOSIT BOX
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Deeds and titles
Marriage licenses and divorce decrees
Birth certificates and Social Security cards
Stock and bond certificates
Copy of your account locator list
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For each item, include relevant information such as the type of account or policy, the company, bank or area where it's housed, the account or policy number, and the name, address and phone number of the agent, broker or lawyer you've dealt with.
Be sure to give a copy of the list to someone you trust, or let that person know where the list can be found in case of emergency.
Obviously, your locator list will need to be updated periodically. "But even if the list becomes out of date, it's a starting point," Levine said. 
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