Build your Legacy File in 10 Steps
I’ve been putting off this post for a long time. Why? Because it will force me to do some work I regularly advise on but have not completed for myself. Completing the job of creating my legacy file is something that has been weighing on me for a long time. Let’s work on this one together, shall we?
What is a legacy file? It’s a file for your loved ones. Should anything happen to you, they will know exactly what you want done by looking into your legacy file. I’m going to keep this short and simple. It’s the only way I know how to get things done. We’re going to complete the following documents and get them in a file. I’m estimating I can have this done in one full afternoon. I’ll update the article on exactly how much time it took me to complete it. Ready? Set. Go!
Will: https://www.doyourownwill.com/ is a free site for composing and finalizing your will. You will need to determine who you want to manage your affairs should you pass and another person if that person also passes. Not fun stuff to think about, but totally necessary unless you want to unleash a world of frustration on your heirs. If you have children, determine who will take care of them in your passing. This will be your children’s custodian. Your finalized, witnessed, and notarized will is the most important document in the legacy file. Here’s a link to an article about online will-making tools: https://www.investopedia.com/best-online-will-makers-4843732
Medical Directive/Power of Attorney (POA): This document instructs your medical team on how you want to receive medical care should you not be capable of making those decisions on your own. It helps your family or loved ones be able to instruct your medical team and makes it easier for them to make tough medical decisions if you have the details formalized. Templates to be used for legal purposes are available for free. There is a version on https://www.doyourownwill.com/ also. Give a copy to your representative and keep a copy in your legacy file.
Financial/Durable POA: This document allows you to state who will handle your financial affairs if you are incapacitated and unable to conduct your own finances. It allows your representative to have access to your money so be sure you select with care. Again, online templates exist for free. You will likely need an unaffiliated witness and possibly a notary. Give a copy to your representative and keep one in your legacy file.
Beneficiaries: Make sure you have beneficiaries listed on all your bank, insurance, investment and retirement accounts. Print out the details and put them in your file. Having beneficiaries listed on all your accounts and policies keeps the assets from going into state probate (something that can take up to a year or longer to settle out for your heirs). Put the details of all your accounts and beneficiaries in your file.
Insurance Policies: Get copies of all your policies. This includes home, auto, personal property, umbrella, life, health, pet, etc. Any policy you own, get the records and put them all together in a file.
Net worth statement: This is a list of all your assets (what you own) and liabilities (what you owe). List out all the details of where your assets are held like banks, investment firms, property address, valuables, etc. Total them all up once you have them listed out. Then, list out all the companies you owe money to and how much. Total this number. Take your total assets and subtract your total liabilities and you now have your net worth. Keep this updated annually and have a copy of the most current version in your legacy file. Here’s another free template: https://templates.office.com/en-us/net-worth-summary-tm00000059
Deeds/titles/bonds: If you have any copies of property deeds, great. If not, the recorder’s office will have them at the county clerk or recorder’s office. Gather up titles for cars, boats, or any other recreation vehicle. If you have savings bonds, you’ll want to gather these up, too. Put photocopies in your file. Keep originals in another safe and secure place.
Passwords, keys/combos: I recommend storing all your passwords and account access information in a password storage security application. Here’s an article on some of the options: https://www.cnet.com/tech/services-and-software/best-password-manager/ or https://www.investopedia.com/best-password-managers-5080381. Make sure your financial POA or durable power of attorney knows what password management tool you use and your login information.
Taxes: Just put your last tax filing details in the folder. It should list out who prepared your taxes if you had it prepared by a professional. If you did them yourself, it should state that clearly.
Identity documents: Make a copy of your driver’s license, passport, birth certificate, marriage certificate, or other important documents like divorce paperwork or adoption certifications. Place originals in a secure place along with titles, bonds or other important original documents. Make sure your POA knows where these are located and how to access them.
Now that we have all this data and paperwork collected, it’s time to figure out where you want to store it. That’s strictly personal preference, but I do recommend a safe and locked space. It could be a fireproof safe in your home. It could be in a safety deposit box at the bank. A locked file cabinet could also do the trick. I also recommend you have electronic copies saved in cloud storage of your choice. Just find a secure spot and let your selected representative(s) know where it is located.
Some of you may notice I left a trust out of this list. That’s because most of us don’t need one. If you have out-of-state property or business holdings, you may need one. Consult with an estate attorney if you think you may need a trust.
As you can see, this is a project. But, it’s doable in a day. Set aside the time and follow this list. You will be happy you did and your loved ones will appreciate all the work and effort you took to make things easier for them.
Want some help getting your personal finances in shape? Click here to schedule your free Q+A.