Record Retention for Probated Estates

[BarbWire]

There have been discussions of record retention for one's personal income tax, but I haven't found any for probated estates.

Dad (91) died in Jan 2015, and his widow (87) was his sole heir. I was the executor of his estate -- very straightforward. She died a few months later in Dec 2015, and I was executor of her estate, appointed in Jan 2016.

They were in Texas, so no state income or estate tax. The distribution of assets was pretty simple, and the probate of the estate took less than six months.

Her/their 2015 individual income tax return was filed in March 2016. Her estate's federal income tax return was filed in June 2016. There was no federal estate income tax -- estate was too small.

Their estate attorney and the accountant -- both excellent -- are now retired and closed their firms, so I can't contact them.

The only skeleton in the closet I know of is that my father took too little RMD in 2012, 2013 and 2014. He never adjusted up from his 2011 level. Oops. TIAA-CREF did not catch this. When I discovered this, i didn't tell anyone. She inherited his IRA and I immediately moved it to Vanguard, never mentioning the issue to anyone. I inherited the IRA in 2016.

I can't imagine anyone challenging the wills but who knows? A mysterious long-lost black-sheep weird third-cousin Waldo might appear, making a claim. Is there a time-limitation for challenging a will that I should be aware of viz record retention?

I have three banker's boxes of their joint financial records, his estate records, and her estate records (old tax returns, banks, insurance, Vanguard, Fidelity).

How long should I hold on to their personal financial records and the records from probating the estates in 2015/2016? Three years? Seven years? My storage space is very limited.



Thanks!

 

[The Cosmic Avenger]

Assuming that this article is accurate, it looks like Texas allows up to four years for heirs who did not know they were entitled to inherit. And according to the Texas State Law Library, the statute of limitations on any debt is four years, so even if the estate was liable for an unknown debt, they're out of luck by now. Sounds like you're safe, although if it were me I'd scan in the important stuff....but then, I normally do that right away and then shred the original, if they don't have a notarization or seal.

 

[BarbWire]

Great, thanks. Sounds like four years is the ticket, and the fact that he under-distributed from his IRA for three years is likely moot as well.

I will of course scan/save the important stuff, but this means that I can probably reduce three banker's box of financial documents etc to just one.


Q: you don't shred a document that is notarized or has a seal because? .....

 

[Texas Proud]

I think you still need to save the info for tax purposes for 7 years... but this is just in my head with no backup..

 

[The Cosmic Avenger]

Q: you don't shred a document that is notarized or has a seal because? .....

Because generally the reason they have those is because they are harder to forge, and originals are often required. (Birth and death certificates, for example.)

Oh, I just realized, if you're worried about Federal tax problems the IRS would not be restrained by state law, but at this point it is extremely unlikely they would notice or care about his 2011-2014 taxes. If they do, I suggest a tax attorney; my father hadn't filed taxes for years before his death. He had been an accountant, and he set his withholding so he would be owed a negligible refund, but for some reason the IRS wanted proof. I paid a tax attorney to represent me, and I don't know what she said, but they decided to just drop it.

 

[cathy63]

Since you know there was an error on the 2014 return, I would hold the tax returns until 6 years after the due date of that return, for a total of 7 years, so April 15, 2021.

Just FYI, TIAA-CREF sent a statement every January that gave the balance of the IRA account on 12/31 and the amount for the current year's RMD. It's just an ordinary monthly account statement with the extra RMD info noted on it, so your father might have missed it. TIAA-CREF was not responsible for enforcing the RMD because they don't know how many IRAs your father had at other institutions and he could have been taking a larger portion of his RMD from some other account.

It's also possible that he was taking more than his RMD all along because he needed it to live on. If he was supposed to take $10K the first year and he actually took $20K in each year, then depending on how the account grew, he might have exceeded his RMD in each year anyway.

If you find the year-end statements in his tax files and determine that there wasn't a problem with the RMDs, then it's fine to shred the tax docs now.

 

[BarbWire]

Thanks, all.

Based on this I will save the year-end statements from TIAA-CREF (but shred other statements) as well as from Vanguard. He wasn't taking more than his RMD -- it was already more than he needed to live on, so he re-invested much of it in taxable funds at Vanguard.

I know for sure that he under-withdrew in 2012-2014, as I'm the one who noticed in 2015 that the amount had held steady at the 2011 level. I think he simply missed it on his statement. Although he had always had an eagle-eye on his finances and investments, by age 88 he was tiring of everything, exhausted from looking after his wife. I got involved helping him with their finances in 2012 -- which made it so much easier when I was executor as I knew where/what everything was -- and I missed it, too.

After his death, when his wife inherited everything, I consolidated all at Vanguard in her name only. That took TIAA-CREF and TRPrice out of the loop, and made it much simpler when I administered her estate. I'm "Flagship" at VG, so I can call my personal advisor and ask about record retention. I might get a solid answer ... or not.

I'm pretty sure I can shred other minor stuff, like the docs from the $13K life insurance policy he bought in 1961....

 

[ERD50]

...

I'm pretty sure I can shred other minor stuff, like the docs from the $13K life insurance policy he bought in 1961....

Suggestion - keep at least one copy from every account he ever had. You just never know.

Years after his passing, some unclaimed property showed up in my FIL's name (I was an executor/successor trustee). I guess it hadn't 'aged' enough when I did the search after his passing. Anyhow, I needed something from that account with his name/address on it, and I had it. I had been planning a shredding party, and I ended up keeping one copy of everything, based on that experience.

-ERD50

 

[Texas Proud]

Suggestion - keep at least one copy from every account he ever had. You just never know.

Years after his passing, some unclaimed property showed up in my FIL's name (I was an executor/successor trustee). I guess it hadn't 'aged' enough when I did the search after his passing. Anyhow, I needed something from that account with his name/address on it, and I had it. I had been planning a shredding party, and I ended up keeping one copy of everything, based on that experience.

-ERD50

OHHHH, I had to prove that my mother lived in New York in 1941 when a life insurance policy she had bought prior to the start of social security... luckily that was the year my sister was born and it had her address on it!!!


You never know what you will need, or how many years back you will have to go...