Now, you may not be going through litigation - I hope you never do - but there may be other reasons for you to keep your paperwork in good order. You may be audited by the IRS. You may have property stolen and need to prove your possessions. You
Daily, Weekly, and Monthly Documents
You need one container for regularly occurring documents such as utility bills, credit card and bank statements, documents needed for your annual income tax returns, monthly loan statements, insurance explanations of benefits, etc. A great thing to use, if you have the space, is a personal filing cabinet. With five children ever crowding my areas, I use something a bit more space-efficient. I use accordion cases with 20 or so subdivided pockets (see picture above). I keep one for each calendar year. I usually purchase it in December or early January, label it on the outside with the year, and label the pockets. Some may file by the month; I choose to file by item category (bank statements, student loan statements, medical records, car insurance, job, etc.).
Annual Documents and Important Papers
I keep important papers in a fire-proof safe. Another good place to store important documents is in a safe-deposit box. The types of documents I consider for this category include income tax returns, life insurance policies, wills, birth certificates, Social Security cards, deeds, and titles. With respect to wills (including a Last Will and Testament, a Durable Power of Attorney for Healthcare, and a Living Will), copies of those documents should be retained by both the testator and any executors, trustees, and/or guardians, along with the Probate Court for safekeeping of your original Last Will and Testament and copies to your medical care providers of the DPAHC and Living Will.
How Long Should You Keep Documents?
I will defer to the IRS website for how long you should keep documents such as tax returns and supporting documents. (I have retained scanned copies of my tax returns since I began filing taxes when I was a teenager. Having those documents came in VERY handy when I applied to take my state's bar exam - they ask for EVERYTHING on those applications!)
With regard to utility bills, you really only need to keep those until you receive the next month's bill and can verify that your payment was properly credited from the previous month. I choose to keep mine a bit longer.
Bank statements should probably be retained for at least 1 to 3 years, if they are not used as supporting documents on your income tax returns. If you have made large purchases using bank accounts, you should keep those records longer. Ditto for credit card statements except for any statements showing you have paid off a credit card. You may want to keep those records indefinitely, or at least long enough to ensure the account is permanently closed and there are no remaining balances and no one else with access to those accounts.
Now, if you are embroiled in litigation and your documents may be or have been requested, heed your attorney's advice!