Personal business records organization example: file folder in a file cabinet marked Files to Keep, 2019 photo by Hawkins Law PC
Personal business records organization example: Photo of a file folder in a file cabinet with a note marked “Files to Keep.”

People loved tips that we shared in a recent seminar. Few people understand the importance of organizing personal business records properly, so this article gives personal business record-keeping tips.

Why is organizing personal business records Important?

Many people rely on memory instead of written personal business records, but what good is memory after a person dies or suffers a disabling injury or illness? How will family members or friends know where to look for information without well-organized records? In our experience, poor planning often delays big decisions and causes expensive problems. People can avoid those problems by organizing personal business records regularly.

What kinds of records should people keep and organize?

We cannot offer a list of records, because the different kinds of information and records that may be important to people is limitless. To keep things simple, we suggest organizing personal business records into 7 basic categories:

(1) Identification.

Identification includes:

  • driver’s licenses or ID cards;
  • Social Security cards;
  • Medicare and health insurance cards;
  • DD 214 military discharge and other military service-related records; and
  • website usernames and passwords.

(2) Relationships.

Relationship records include:

  • marriage certificates (even for prior marriages);
  • divorce decrees and property settlement agreements (even after remarriage);
  • death certificates for deceased parents, spouses, and children;
  • birth certificates for all close family members;
  • adoption decrees for adopted children; and
  • court orders approving name changes.

(3) Assets.

Everyone should maintain complete asset records for at least 5 years. Asset records include account agreements and statements for all kinds of assets.

  • bank accounts;
  • life insurance policies;
  • annuity contracts;
  • investment accounts; and
  • retirement accounts.

Bank accounts may include:

  • certificates of deposit (CDs);
  • money market accounts;
  • checking accounts; and
  • savings accounts.

Investments may include:

  • small businesses;
  • farmland and rental houses;
  • “non-qualified” deferred and immediate annuities;
  • stocks in publicly traded companies;
  • bonds (including corporate bonds, municipal bonds, and US savings bonds); and
  • mutual funds.

Retirement accounts may include:

  • IRAs;
  • 401(k) plans;
  • “qualified” or “IRA” annuities;
  • Roth IRAs;
  • deferred compensation plans; and
  • all other kinds of plans that grow on a tax-free or tax-deferred basis.

(4) Income.

Income includes:

  • rent from rental properties;
  • royalties from coal, oil, gas, and other minerals;
  • royalties from patents, copyrights, and other intellectual property;
  • pensions;
  • Social Security benefits; and
  • income from current employment.

We encourage everyone to keep copies of income tax returns for at least 5 years for 4 reasons :

  1. Income tax returns help identify income-producing assets for which someone has misplaced ownership records.
  2. Income tax returns remind taxpayers of past expense deductions that may be deductible in future tax returns.
  3. if a tax advisor dies, moves, or retires, old returns can help a new tax advisor get up to speed.
  4. State officials can require copies of the last 5 income tax returns in a nursing home resident’s Medicaid application process.

The Social Security Administration issues an important notice each fall about cost-of-living changes to benefits that will take effect in January. Medicaid requires a copy of the notice during the Medicaid application process.

People should also keep records about asset-based income sources. Those source records may include copies of leases and all other related records about sales or leases of coal, oil, gas, or mineral interests.

(5) Past Gifts.

Gifts include gift and bargain transfers of assets to church, family, and friends.

  • vehicles;
  • real estate;
  • life insurance policies;
  • money (by cash and check); and
  • other assets.

We recommend that everyone keep complete gift records for at least 5 years. A person that fails to report a gift on a Medicaid application commits a felony, and state officials are developing creative methods to identify and track gifts.

Some families can resolve gift problems and save thousands of dollars if they give us complete gift records. However, state officials deal harshly with people that withhold gift information in Medicaid applications.

(6) Estate Plan Documents.

We cannot list every kind of important estate plan document, but these are some common document :

  • powers of attorney;
  • pre-planned funeral arrangements;
  • deeds for real estate;
  • appointments of health care representatives;
  • wills; and
  • trust agreements.

(7) Your Other Important Information.

Other important records include photographs, videos, and family histories. An old tool or piece of furniture may seem worthless, but a story about an ancestor’s use of something can make it priceless.

Time is a records organizer’s enemy.

Delay in organization creates at least 3 big problems. First, the longer that you wait to organize personal business records, the bigger the task becomes. Second, if you wait too long to to replace a lost or destroyed record, you may not be able to replace it. Third, if you wait too long to begin organizing personal business matters, a crisis that requires organized records may strike before you finish the organization job. Therefore, we encourage everyone to begin organizing records today. The best way to eat an elephant is one bite at a time, and the best way to begin organizing personal business records is one record at a time.

About the Authors

Jeff R. Hawkins and Jennifer J. Hawkins have practiced in the areas of trusts, estates, and elder law for over 26 years. Both lawyers are Trust & Estate Specialty Board Certified Indiana Trust & Estate Lawyers and active members of the Indiana State Bar Association and National Academy of Elder Law Attorneys. Both lawyers are admitted to practice law in Indiana, and Jeff Hawkins is admitted to practice law in Illinois. Jeff is also a registered civil mediator, a Fellow of the American College of Trust and Estate Counsel and the Indiana Bar Foundation;  a member of the Illinois State Bar Association and the Indiana Association of Mediators; and he was the 2014-15 President of the Indiana State Bar Association. Find more information about these and other topics at www.HawkinsLaw.com. © Copyright 2019 Hawkins Law PC. All rights reserved.

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