After the death of a loved one, you may find yourself sorting through a heap of paperwork and administrative duties. This can bring up questions that may have never occurred to you before, such as “how long should you keep bank statements?” This guide will uncover what types of financial documents are critical to keep, and for how long.
How Long Should You Keep Bank Statements After the Death of a Loved One?
After the passing of a loved one, we generally recommend keeping their bank statements for at least three to seven years.
Retaining financial records for an extended amount of time is important. It allows you to address any financial or legal matters that may come up during the settlement of their estate. Bank statements are helpful in resolving outstanding debts, filing tax returns, and distributing assets to beneficiaries. Having a clear financial history can also help dispute and resolve any disputes, claims, or even fraudulent activity.
You’ll also want to consider the statute of limitations on various legal matters that can arise. Keeping important financial documents can be helpful in the case of estate disputes or even tax audits.
Last but not least, keep in mind that different types of financial accounts can warrant different treatment. Savings and checking accounts should be kept for three to seven years, while investment or retirement accounts may be kept for longer.
These next sections will discuss how long to keep various types of financial accounts in further detail.
How Long to Keep Personal Checking and Savings Account Bank Statements
When it comes to a deceased person’s personal checking and savings statements, you luckily won’t have to save as much as you’d think.
The Internal Revenue Service’s statute of limitations for an audit is three years. The longest you’ll want to hold onto any financial statements is seven years, aside from tax records.
Here is a guide of when you can shred personal finance documents:
Offers from credit card and insurance companies
Receipts from ATMs, sales
Paid utility bills and billing statements
Shred after 1 year
Non-tax related bank and credit card statements
Receipts for larger purchases (appliances, vehicles)
Shred after 7 years
Financial account statements
W-2s and other employment forms
How Long to Keep Business Checking and Savings Account Bank Statements
If your loved one owned a business, financial documents related to the business require special treatment. Businesses are much more likely to be audited by the IRS, and are often tied to employees, partners, contractors, and other third parties. To be safe, we recommend keeping the following business-related documents for a minimum of seven years:
Tax returns and records
Credit card statements
How Long to Keep Retirement Account Bank Statements
Investment and retirement accounts such as 401(k)s and Individual Retirement Accounts (IRAs) often contain financial transactions and tax implications. Pay particularly close attention to any documents related to these accounts, as they are critical to estate planning. Your loved one’s estate planning documents should indicate how these assets should be handled. If they didn’t leave a Will, then these matters must be determined through the probate process. We recommend retaining these records for an extended period, typically beyond the standard three to seven years.
Here are some examples of documents related to investments and retirement savings to retain for your records:
Retirement account documents and statements
Investment asset ownership certificates
Investment account documents and statements
Life insurance policy
Homeowner insurance policy
What to Do with Bank Statements of the Deceased
Now that you have an understanding of the important financial documents you need to keep, you may be wondering exactly how to handle them. Proper management of financial documents is important for two reasons: staying organized so you can easily respond to estate settlement, taxes, or any disputes, and preventing identity theft and fraud.
Here are some document management and security tips:
Store any physical documents in a fireproof and waterproof safe or filing cabinet.
Organize files by year and type and clearly label them.
Store electronic documents and digital backups of paper files securely using a password-protected folder. Consider protecting files further with encryption.
Back up your digital files by copying them to an external hard drive or secondary cloud storage in the case of data loss or corruption.
Keep your personal documents separate from your loved one’s.
Audit your documents and destroy the ones you no longer need to keep.
Commonly Asked Questions About How Long to Keep Bank Statements
Is it worth keeping a deceased loved one’s old bank statements? For how long? Can the Internal Revenue Service really audit my loved one even after they’ve passed away? As you begin to sort through a loved one’s documents and records, a number of questions will likely pass through your mind. Here are the answers to some of the most common questions regarding keeping bank statements.
Is it worth keeping old bank statements?
Yes, it is worth keeping the old bank statements after the death of a loved one. You won’t have to hold on to them forever, but you should store them for an appropriate time period. Typically, you’re advised to keep financial statements for three to seven years.
This provides an appropriate amount of time necessary to settle a deceased person’s estate, address possible legal or financial obligations, resolving disputes, and filing tax returns. Any number of these matters will require the personal representative of the estate to refer back to these financial documents. While it does take some time and effort to organize and secure these statements, it’ll give you peace of mind knowing that you’re prepared to respond to important matters related to the estate. In general, you can shred these documents after seven years.
How far back can the IRS audit a deceased person?
The IRS can generally audit a deceased person's tax returns up to three years after the date of filing, or within two years of the date the tax was paid, whichever is later. However, if the IRS suspects fraud or significant underreporting of income, they can extend this statute of limitations to six years after filing.
You should also note that there is no statute of limitations if the deceased individual failed to file a tax return or filed a fraudulent return. It's essential for the executor or administrator of the deceased person's estate to retain their tax records and related financial documents for the recommended retention period, typically at least seven years, to address potential audit inquiries or disputes with tax authorities. Consulting a tax professional or attorney knowledgeable in estate matters can provide specific guidance based on the individual circumstances.
What records should be kept for 7 years?
It’s helpful to keep certain types of records long term in case any tax audits or legal disputes arise. Here are some records you should consider keeping for up to seven years:
Bank and credit card statements
Receipts and invoices
Property and real estate records
Unpaid medical bills and insurance claims
Legal and estate documents
Outstanding loan documents
Life and home insurance policies
Education records (transcripts, diplomas, tuition payments)
You may find it helpful to consult a tax professional or attorney, as every deceased individual’s estate is unique. While the general rule of thumb is to keep financial records for three to seven years, the circumstances may dictate a different guideline.
Who can see deceased bank statements?
There are a few factors that dictate who can access a deceased person’s bank statements, including probate laws, privacy laws, and the decedent’s estate plan. Here are some examples of who might be able to view the bank statements of an individual who passed away:
Executor or Administrator
Probate court officials
Authorized account signatories
Joint account holders
Government and legal authorities
If you believe you should have access to your loved one’s financial records, a good place to start is with their bank. Banks have their own sets of policies regarding the privacy of their customer information, but you may be authorized to gain access upon death based on your relationship to the account owner. For instance, the spouse of the decedent or Executor of the estate can often obtain these documents with proof of their identity.
Ensure Sure Your Documents Are Protected with Trust & Will
When it comes to leaving a financial legacy, you’re likely thinking of things in a macroscopic context. While this is amazing in itself, you shouldn’t forget to also address some practical matters. You’re likely not thinking about things like how long you should keep bank statements, but it’s these types of questions that can create a headache for your loved ones if they’re not addressed.
As a part of your estate planning process, we highly recommend getting your financial documents and records organized. Your loved ones will thank you for it! You can use this guide as your reference as to what documents should be kept, and for how long, and which ones you can go ahead and shred.
For greatest peace of mind, and ease of transferability, consider protecting your documents with Trust & Will! Members enjoy a digital vault system to store their important documents securely as a part of their estate planning benefits. Find out more here.
Is there a question here we didn’t answer? Reach out to us today or Chat with a live member support representative!
Trust & Will is an online service providing legal forms and information. We are not a law firm and we do not provide legal advice.