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What to do if Dad's living trust is lost

My father died unexpectedly, and so far I've been unable to find a signed, notarized copy of his living trust. All I've found are unsigned copies. The attorney who drew up the trust more than 20 years ago does not have a copy. Another attorney I spoke with told me that if I can't find the trust, his estate will have to go through probate. Do you have any advice?

Those of you with living trusts, take note: If your heirs don't know where to find your documents, all your planning will have been in vain.

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Living trusts are designed to avoid probate, the court process that otherwise follows death. Although probate is no big deal in many states, in others - such as California and Florida - it can be an expensive and time-consuming process.

Before you give up hope entirely, here are some ideas courtesy of estate planning attorney Burton Mitchell in Los Angeles:

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Scan your father's checkbook to see whether any checks were written to an attorney. He might have switched lawyers.

Talk with your father's accountant, if he had one. A tax pro would know the details of your father's financial life and might be able to provide some help.

Look for evidence that your father had a safe-deposit box that you might not know about. His checkbook or bank statements might show a safe-deposit box fee.

Turn the house upside-down. Start with any place in the home your father might have considered a secure location. People keep important documents in all kinds of places, from the family Bible to the freezer.

If you can't find the signed document, your father's estate must go through probate. If that's the case, learn the lesson this situation offers and make sure your own family knows where to find your important documents in case of emergency.

Is there a rule of thumb for keeping or trashing old statements? I am in the midst of organizing my paperwork and want to know what can be thrown out and what I should keep with regard to credit cards, bank accounts, investments, 401(k)s, mortgages, payment stubs, tax returns, utility bills, old insurance policies and so on.

Generally, if the paperwork is tax related, you'll want to keep it for at least seven years. Your risk of being audited - which typically isn't high to start with - declines significantly after three years, but the statute of limitations is longer if the IRS believes you underreported your income. (If you committed fraud, there is no limit on when the IRS can come after you, but we'll assume you're not a crook.)

You don't have to keep every single piece of tax-related paper, though. If your brokerage provides a year-end summary of your investment activity, you can throw away your monthly or quarterly statements as soon as you get that summary. Pay stubs can be discarded once you get your W-2 for that year, and credit-card slips can be ditched after you've matched them with your monthly statements.

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Some paperwork you'll need to keep for more than seven years. You'll want to retain paperwork related to the purchase of a home, an investment or other property for seven years after you've sold the asset.

Hang on to receipts for home improvements as well, because those can decrease any taxable profit you might otherwise face when you sell the house.

When it comes to retirement accounts, save proof of any nondeductible contributions pretty much indefinitely.

This includes everything you put into a Roth, any contributions made to a traditional IRA that you didn't deduct and any after-tax contributions to a workplace retirement account.

If all your contributions are deductible, however, you probably need to keep only your year-end statements, if that. All your 401(k) withdrawals, for example, will be taxed as income, so there's no reason to hang on to any statements along the way.

Insurance policies can be ditched once they've expired, as long as you don't have an outstanding claim or a reasonable possibility of making one.

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Otherwise, haul out your shredder. Your bank, brokerage and credit-card companies will keep electronic copies of your statements for at least six years, so you should be able to obtain duplicates if you need them.

The Los Angeles Times is a Tribune Publishing newspaper.


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