Making Life Easier for Your Loved Ones When You Pass Away - Part 2 of 2

See yesterday’s blog posting for the first part of this article…

One of our recommendations to our clients is to make sure that they clean out all of their old documents. Get rid of old bank statements, deeds, life insurance policies, and tax records. In the August 10, 2012, IRS Summer Tax Tip 2012-16, the IRS has given us some very good guidelines on what to keep and how long to keep these items for both individuals and business owners:

What to keep – Individuals: In most cases, keep records that support items on your tax return for at least three years after that tax return has been filed. Examples include bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks or other proof of payment and any other records to support deductions or credits claimed. You should typically keep records relating to property at least three years after you’ve sold or otherwise disposed of the property. Examples include a home purchase or improvement, stocks and other investments, Individual Retirement Account transactions and rental property records.

What to keep – Small Business Owners: Typically, keep all your employment tax records for at least four years after the tax becomes due or is paid, whichever is later. Also, keep records documenting gross receipts, proof of purchases, expenses and assets. Examples include cash register tapes, bank deposit slips, receipt books, purchase and sales invoices, credit card charges and sales slips, Forms 1099-MISC, canceled checks, account statements, petty cash slips and real estate closing statements. Electronic records can include databases, saved files, e-mails, instant messages, faxes and voice messages.

How to keep them: Although the IRS generally does not require you to keep your records in any special manner, having a designated place for tax documents and receipts is a good idea. It will make preparing your return easier, and it may also remind you of relevant transactions. Good recordkeeping will also help you prepare a response if you receive an IRS notice or need to substantiate items on your return if you are selected for an audit.”

If you don’t take the time to clean up your files today while you are alive and still have the mental capacity to do it, your loved ones will be the ones burdened with the task of doing so, which creates great inefficiencies in the administration of your estate.

Remember, you created your estate plan for one reason – to make things as simple and easy as possible for the loved ones you leave behind. One of the greatest things you can do to ensure that happens is to make sure your estate is in order prior to death.

For more information or to schedule your free consultation, contact us today at 888.222.1328.

Contributed by MH Phoenix, Arrowhead and Scottsdale Estate Planning Attorney and Partner David T. Eastman

What the Attorneys of Morris Hall Can Do For You:
The attorneys at Morris Hall have 100’s of years of combined experience ensuring that families’ assets are protected from probate, unnecessary taxes, creditors, ex-spouses and Medicaid spend-down. The attorneys also help those in Arizona and New Mexico to apply for and receive Medicaid assistance and Veterans Benefits. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead. Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe. Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.