The Basics of Record Retention and Management

The Basics of Record Retention and Management

Posted on April 19th, 2019

Record Retention and Management is an organizational function devoted to the management of information. Essentially, from when a piece of information is created, a schedule to ensure the records are legally kept for the appropriate amount of time and that some records are properly disposed of should be implemented.

The period of time you should keep a document will depend on a couple of items including the action, expense, or event the actual document records. For example, if you are interested in knowing how long to keep your tax returns, typically, you should keep any records that supports an item of income, deduction or credit shown on your tax return until the period of limitations for that tax return runs out.

Why is this necessary? There are numerous reasons why record retention and management is necessary including to ensure compliance on a federal, state and regulatory level along with safeguarding valuable information, to support decision making and finally, to improve efficiency, productivity, and rapid retrieval of information. It’s important to know that Record Retention can be practiced in both professional and personal life.

The problem is that in a long term marriage, proving what property each person had at the date of marriage, ie in a retirement plan can be difficult if you do not retain that information yourself.  Generally, after seven years, it is extremely difficult to obtain records from any third party, as many third parties maintain records only for seven years.

A record can be defined as is any form of recorded information, regardless of its physical characteristics, that is created, received, recorded, maintained, or legally filed in the course of the institution or unit’s business activities or fulfillment of its legal obligations.

Importantly, the physical characteristic of the recorded information is immaterial to the question of whether it qualifies as a record. For personal records, items like titles, marriage certificates, death certificates, home and car insurance policies and medical history are all considered records.

Knowing how long to keep records can be also be tricky, a few item examples and time include:

Proof of title or ownership.  Keep active until you sell the asset. Then, permanently archive the associated records. 

Credit card and loan agreements.  Keep for as long as the account is active.

Credit card and bank statements.  After a year, destroy them unless they have tax significance.

Credit reports.  Keep until you order your next free annual credit report.

Home and car insurance policies.  Keep until you get your next policy in the mail.

Medical records.  Keep permanently.

Vital records and proof of person.  Keep permanently.

Tax returns.  Keep permanently.

Keeping all these documents in one place can be tricky and unorganized. A different option is to digitally store these records. One can store these records on a computer, however it’s important to remember to completely remove all personal data if you are selling the computer. Other, more secure options can be adding all the records to a portable storage device or to a cloud service. Some applications or cloud services offer privacy protection for your confidential documents.

Sadly, in some divorces, the person with the best records wins especially if that person is tracing his separate property in order to retain it and not have it be marital or community property.  Also in trust or estate litigation, records regarding gifts or transfers to family members are very important to retain forever.