So now that I have covered some of the records you need to keep in your home filing system, I would like to talk about what belongs in your safe deposit box.
As I said earlier, you’ll need a safe deposit box for anything that is difficult or expensive to replace. Let’s start with personal records. This includes things like birth and marriage certificates, as well as adoption, citizenship, and divorce papers. These documents can be replaced but it can take time. When you need them, you’ll be glad to know exactly where they are located.
Your safe deposit box should also contain proof of ownership for major possessions. This would include things like the deed for your house, titles for your cars, as well as any stock or bond certificates. Again, these can be replaced but not without a lot of time and effort on your part.
When it comes to a will, many people mistakenly assume that a safe deposit box is the only place you need to keep a copy. Your signed, original will should be stored in your safe deposit box. But access to your box can be delayed after your death. That’s why it is a good idea to keep a copy at home in a clearly marked file and leave an additional copy at your attorney’s office. Just be sure to destroy all old originals and copies if you make any changes; this will eliminate any confusion among your loved ones after your death.
Once you have made it this far, you may think the job of organizing your financial records is complete. But there is one last step you need to take. That is to prepare a personal financial overview. Simply put, this is an inventory of all the people and things that are important to understanding your financial life. If any one needs access to your financial affairs, the information is located in one convenient spot. I recommend using a three-ring binder for this task since pages can easily be added and removed as your financial circumstances change.
To begin your financial overview, compile a list of your assets. Include all of your bank and investment account numbers along with the names and phone numbers of the financial institutions.
Next gather up a record of your debts. Include all of your credit card accounts, mortgages, car loans and the like, including account numbers and contact information.
Then, prepare a catalog of important documents, like your will, power of attorney, and insurance policies, noting where they are located. Be sure to specify the financial institution that holds your safe-deposit box and the location of the key to your box. You may also want to include a list of the box’s contents. And finally, be sure to jot down the names and phone numbers of all your financial advisers, including your attorney and CPA.
Once your financial overview is complete, give copies to your next-of-kin, attorney, CPA, and trustees, if any.
Now, if you follow the advice I’ve outlined today, you will have tamed the paper tiger. But how do you go about keeping it under control? It takes only minimal effort to keep your financial records in order. Make it a weekly habit to go through your paperwork. Pay your bills and stash any documents that you need in the appropriate files.
Once a year, give your whole record keeping system an overhaul. Discard any documents and files that are no longer needed and move old tax returns and the like to your dead storage area.
And remember, when it comes to maintaining an organized financial record keeping system, clutter is the enemy. Discarding unneeded paperwork is an important part of keeping your records under control.