Q: In the spirit of Marie Kondo, I am looking to do a big clean up of old papers and records around the house. Before I get too enthusiastic, can you please guide me on what financial documents I should keep and what I can cull?
A: Broadly speaking any documents that prove who you are, what you own, your education and employment records and your medical health history, should be kept indefinitely.
Property records that should be kept would include; property deeds, mortgage papers, renovation approvals and warranties relating to building works. However once you have sold a property, you may wish to dispose of these records beyond the settlement date of the property and after warranty periods have expired.
Proof of ownership for assets including Superannuation, investments, insurance policies, motor vehicles ownership, registration and service history and personal property should be retained whilst you own the assets.
Identification documents such as Driver’s Licence and Passports should be kept whilst they remain valid or until replaced with a new version. If they are not replaced, they should be retained as the last version of the document.
Documents that provide a paper trail that may be called upon either by you or your estate should be retained for your life and sometimes beyond. Examples would be documents such as Wills, Powers of Attorney, Birth Certificates, Marriage Certificates, Record of Decree Nisi and Death Certificates.
Medical records including treatment records and referrals to medical practitioners and immunisation history should be retained indefinitely in case you need for future reference. For example, if you need to provide health history if applying for insurance or for future medical reasons for you or your family.
Some records you are legally obliged to retain for a prescribed period. For example, you are obliged to retain your personal tax records for five years in case you are required to substantiate your claims. Tax records include; your Notice of Tax Assessments, evidence of wages, interest, dividends and rental income. Expenses related to income such as work-related outgoings or rental repairs. Sale or purchase of assets such as property or shares. Donations, contributions or gifts to charities. Private health insurance and medical expenses for both you and your family.
Financial records and paperwork you can throw away should be limited to those that are redundant. As a general rule, once a document has been replaced by a newer version, it’s safe to dispose of the older copy. Examples may include Superannuation member benefit statements, insurance policy renewals and utility bills.
You should keep credit card and bank statements for at least a year unless they are required to be retained for tax record purposes.
Credit card receipts may be disposed of once you’ve reconciled them against your bank statements unless they need to be retained for warranty purposes.
Be careful about how you dispose of documents. Use a shredder or a secure document disposal company to keep your details safe against the risk of identity theft or fraud.
Reduce your paperwork by maintaining digital records. Many companies are moving towards electronic statements. You can also make electronic versions of your old documents by scanning to an electronic file storage.
Maintain your hard copy or electronic files in clear logical order. This will assist you in retrieving information and be invaluable to your family if something is to happen to you.
Protect your documents. Think about storing important documents in a fireproof or waterproof safe or offsite. For extra security, you can back up online files on an external hard drive or a cloud-based solution.