According to industry statistics, in 2015 9.5% of US households rented a storage unit. People rent storage units to keep all types of items when they don’t live in a home with adequate storage. Some of the items are seasonal like holiday decorations, seasonal linens, or ski equipment. Some of the items are used sporadically like suitcases or camping paraphernalia.
And then there are things that end up in storage never to be looked at again. That was the case with the storage unit pictured here. A few years ago, my client, a newly widowed elderly woman moved from her apartment into assisted living. She and her husband had a small storage unit while he was alive. When the time came to move she wasn’t able to think about sorting through their possessions and discarding things that she wouldn’t have room for or didn’t need in her new location. She took with her anything that was of value and rented a larger storage unit for everything else refusing to discard anything at all.
Last year she passed away never having again seen anything that was in the storage unit. Her heirs live in another state and so ultimately it was left to me to empty her room at the assisted living facility. That meant that anything of value the family wanted was moved to the storage unit, while the rest was either donated or discarded. Fast forward to this month and the heirs returned with the express purpose of going through the storage unit, deciding what they wanted, what should be donated, and what should be pitched.
I knew there was a ton of paper to be shredded. When my client’s husband passed away I was given limited access to papers that were stored in two large file cabinets so that I could help her settle her husband’s estate. In looking for pertinent information about insurance policies, pensions and investments I found tax returns that went back to 1990, bank statements that also went back to 1990 from defunct banks, and investment statements for companies that no longer existed.
Problem#1 – I spent a lot of time tracking down insurance policies that were no longer valid as they had been borrowed against, the loans never repaid.
Problem#2 – Many of the companies named in her husbands investment tracking spreadsheets had changed hands and/or names, or the stocks had been sold. I spent quite a bit of time following their timeline forward and reconciling them with the most recent investment statements. This cropped up again when my client died and we found a stash of uncashed checks in her apartment from some of the the same companies.
My client would not let me discard any of these items even after her husband’s estate was settled, and it all went into the storage unit. When we went to work through the contents of the storage unit this month we also found a bunch of annual reports, expired credit cards as well as credit card statements that were over 15 years old.
To be on the safe side it was decided that all the financial information as well as anything with their names and address on it would be shredded. We have a shredding service in Eastern Massachusetts that will send out postage pre-paid boxes that hold 35 lbs of paper. A couple of weeks ago I spent several hours filling up 6 of these boxes which I then took to UPS.
While the standard for keeping tax return records used to be 7 years, here’s what the IRS recommends now:
- Keep records for 3 years if situations (4), (5), and (6) below do not apply to you.
- Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.
- Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
- Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.
- Keep records indefinitely if you do not file a return.
- Keep records indefinitely if you file a fraudulent return.
- Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.
When it comes to other financial information, here’s what Suze Orman recommends for decluttering your financial records.
Don’t waste money putting financial records in storage after you no longer need them. Don’t waste space in your own home saving financial records that you no longer need. Every time you move you should reevaluate the financial records you are saving so that you don’t wast time and money moving records you don’t need to save. It is good to periodically declutter and discard what you don’t need. This will make it easier each time you move, and in the end a lifelong habit of decluttering will make it easier on the family you leave behind.
Had my client been my mother I would not have put most of the financial records she and her husband had saved, into storage. I knew at the time she would never look at them again or ask about them, but she was a client and not my mother so I did as she asked. If you are moving your parents into assisted living help them to understand what they should throw out at that time rather then waiting until after they die when you are overwhelmed with other things that will need to be taken care of.