Preparing and planning for when you are no longer here is a very difficult conversation. As your trusted advisor, we find it very helpful to our clients’ families and loved ones that we help you get organized now.

What Is a Legacy file? 

But what is it? People draw up estate plans and documents which are critical pieces in planning, but there is often a missing part of planning where we forget to educate the special people in our life where to get access to, understand and how to make sense of the financial details in your life. (i.e. Pension benefits, survivor benefits, life insurance, wills,  investment holdings and accounts,  personal items, passwords,  trusts, Social Security, Debts, medical documents, liquidity, monthly income/expenses, etc.)

Well, it might very well be an actual physical file that houses all of the important information that your family would need if something happens to you. Unfortunately, a will or estate plan won’t be helpful if no one knows where to access them and bring everything together.

While this part of planning for the future is not as fun as planning for retirement or that next dream vacation, it’s definitely a task that’s worth its weight in gold. Having your legacy file set up means eliminating a whole lot of added stress and confusion during a time when tensions are already running high. We have sat in the room with loved ones when they are putting the pieces back together after a loved one has passed. The uncertainty of not knowing where to finds these important items or what they have can be very overwhelming. They do not need to be asking….are we going to be ok? 

How to Set up Your Legacy file

It starts with a meeting to identify, prioritize and list the financial components in your life. First things first: Make sure your financial file is in a known location. (It might even motivate you to clear out one of those pesky junk drawers you’ve been meaning to get to!) The file should contain everything your spouse or family needs to know if you aren't around. That means anything to do with your financial life, your medical wishes, plans for your funeral, even all those passwords you’ve got memorized but no one else knows. And while you’re setting up your legacy file, go ahead and set up a safe deposit box too where you can keep a backup set of copies.

But don’t stress, we’re going to break down exactly what documents to include and how to organize them so your loved ones can find what they need quickly.                                                           

What to Keep in Your Legacy file 

Once you have your legacy file cleaned out and ready for documents, grab a stack of file folders and labels. You’ll want to keep all your files organized and easy to add to and sort through. Here are the 11 documents we recommend you keep in your legacy drawer:

  1. Cover Letter 
    Don’t worry, this isn’t like a cover letter for a job application. This is simply a letter stating the purpose and contents of the legacy drawer. Nothing fancy, just a way to introduce your loved ones to what they can find inside the drawer.
  2. Will and Estate Plans
    You’ll definitely want to include any and all information pertaining to your will & estate. Don’t forget to include the names of the executor and powers of attorney. 
  3. Financial Account Information 
    This one’s simple: Anything that has money in it and your name on it should be listed in the legacy drawer. This includes account names and numbers and the amounts currently there.
  4. Funeral Instructions 
    All the details surrounding your funeral should be included in your legacy drawer so your loved ones can fulfill your wishes. And get specific. Do you want to be buried or cremated? Is there a funeral home you prefer? What do you want included in your service? If you’re married, create a set of instructions for you and another set for your spouse.
  5. Insurance Policies 
    This one’s a biggie. Think of all your insurance policies as the safety net you’ve worked really hard to create and pay into to protect your family. In the event of your death or an emergency, you want your loved ones to be able to access their safety net quickly so they can avoid being in limbo financially and emotionally. Gather and organize all your insurance information, including health, car, disability, term life and anything else insurance-related into one single document for easy reference. List the type of insurance, who the policy is for, policy numbers and contact information.
  6. Important Documents 
    Any legal or other important documents you have should be included in this file. Think deeds, marriage and birth certificates, Social Security cards and titles.
  7. Legacy Letters 
    Your legacy drawer is all about your legacy after all, so use this file to leave behind letters for your loved ones. Tell them how much you love them, what they’ve meant to you or anything that you want to make sure they know if you’re no longer around to tell them.
  8. Monthly Budget 
    Add a copy of your written budget so your family knows how to operate the household in your absence. Make a note of any automated payments and the accounts they’re tied to. Current Income sources and how they are effected by your passing and if survivor or payments. 
  9. Tax Returns 
    Keeping tax returns in your legacy drawer is like an insurance policy for yourself in the event that you get audited by the IRS. (And yes, you can get audited even after death!) Hopefully you never have to pull them out, but if you do, at least you’re prepared.
  10. Passwords 
    Write down all passwords, combinations, usernames and PIN numbers. (No judgement, this is an update of all your passwords from your dog’s name or your wedding anniversary to something safer.) This allows your loved ones access to any documents, money or information that’s left when you’re gone.
  11. Safe Deposit Box Instructions 
    While you’re creating your legacy file, you should also setting up a safe deposit box. Make a copy of everything you put in your legacy file and keep it there. Create a folder in your file that includes instructions of where your safe deposit box is and who has access to it.

Once all your files have been set up, don’t forget the most important step. Tell your spouse or another trusted loved one where your legacy file is!

This is also a great meeting to share with them specifics they might not be aware of or that have changed over the years. Maybe you’ve changed your medical or financial power of attorney. Or maybe you’d like to give your grandmother’s ruby ring to someone else. Keep your loved ones in the loop when these types of changes happen.

Creating your legacy file might seem like a lot to do at first, but once you get going you can knock it out in 30 days or less. Then set a reminder in your phone or add a note to your calendar to revisit your legacy drawer every six months. Check to see if any documents need to be added or amended, or if you need to make copies of new or changed information for your safe deposit box.

Just think, with your legacy file in place, not only are you protecting your family but you’re also giving them one of the greatest gifts of all—peace of mind.

Ready to create your legacy file? In our meeting we will help you discuss these items. 

And get your finances looking as neat and tidy as your legacy file. 

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