Why You Need A Legacy Binder

Why You need A Legacy Binder

What is a Legacy Binder? It’s a central location where you keep all the necessary information concerning your life. It can be a folder, a portfolio, a pouch, a suitcase, or a literal binder. You can even create a digital Legacy Binder at Fidsafe. But regardless of what you use, it serves to store the information that would become necessary to your loved ones upon your death.

It’s not a subject most people want to talk about, and that’s completely understandable. But the reality is that each of us will die at some point. And given how complicated life is today, there will be literally dozens of loose ends when that happens.

Why You Need a Legacy Binder

It’s likely that most people die without having anything resembling a legacy binder. That forces loved ones into a mad search. If you’re like most people, your critical information is probably spread across at least a half dozen different locations. These may be in your home (and in several places), or at remote locations, like your work.

Your loved ones will already be distressed when you die. That’s hardly the right frame of mind to search for critical documents. They may not even know what documents they should be looking for!

The purpose of a legacy binder is to have as much information as possible assembled in one place. That doesn’t necessarily mean you have to have copies of all necessary documents. But you should at least have instructions as to where those documents can be found.

Related: ICE Binder: The “Done For You” Legacy Binder You've Been Looking For

What Should be in Your Legacy Binder

We’re going to consider the type of information and documentation that would become suddenly necessary upon your death. There’s probably a lot more here than you’ve ever considered, which is the entire purpose of this post.

Here are the general categories, with some specific details. Your list may be longer or shorter, depending on your personal circumstances.

Your Last Will and Testament

You’re probably not going to have your will included in the legacy binder. But the binder should provide instructions as to where it can be found. Normally, you will have one copy at home, and another on file with your attorney. The binder should indicate where in the home it’s located, and who the attorney is, complete with contact information.

This should probably be the first information presented in the binder, since it will become immediately relevant upon your death.

Other Important Legal Documents

Same situation here, you should either include the documents in the binder, or indicate their location.

There’s a long list of possibilities here. Topping the list would be any trust documents, since they can have an immediate impact on your loved ones upon your death. Other documents might include a copy of any divorce decrees, legal agreements, or property deeds. It should probably also indicate the location of documents pertaining to bankruptcy or lawsuits, even if they were settled long ago.

Insurance Policies

The most important documents here are life insurance policies. In fact, the policies should probably be included in the binder. Include all life insurance policies you have, no matter how small.

But the binder should also indicate the location of other insurance policies, such as auto, health, homeowner’s and even business policies. You can never know what claims will be asserted upon your death. As well, you’ll want to make sure that your loved ones are not scrambling to find these policies in a dozen different places.

Related: Disability Insurance: The Most Important Insurance People Don't Buy

Bank and Credit Card Information

This should include a list of both bank accounts and credit cards. You should list the institution, the location, contact information, and of course account numbers. Then add the location of where the most recent documents are stored.

Investment Account Information

This is similar to bank and credit card information. You should provide a list of any active accounts, as well as contact information and account numbers.

The list should include taxable investment accounts, mutual funds, stock or bond certificates held, and retirement accounts, including IRAs and employer-sponsored plans.

Benefits Information

You should include information related to your employer, any benefits they offer, as well as contact information. This can be especially important in regard to pension plans, since there may be spousal beneficiary provisions.

If you’re already collecting retirement benefits, including Social Security, include any recent information, including award letters and/or recent 1099s for tax purposes.

Income Tax Returns

You probably have a storage drawer where you keep copies of recent tax returns. Or maybe you have digital storage media. Your binder should indicate where this drawer or media is located.

Income tax information sometimes becomes important after death. Making sure your loved ones know where your recent tax returns are will avoid the need for them to contact the IRS to obtain copies.

Home Related Information

Include the location of the deeds to any property that you own, as well as any mortgage documents related to those properties. It would also help to periodically update mortgage account statuses, to reflect the most recent balances. Again, include the name of the lenders, contact information, and account numbers.

While you’re at it, add utility information. This can include providers, contact information, and account numbers for companies providing electricity, gas, cable, water and sewer, and trash. If you live in a homeowner’s association neighborhood, include contact information for the HOA board, as well as the amount of the monthly, quarterly or annual HOA dues.

If you have a lawn care or snow removal service, contact information should also be provided, as well as the basic fee structure and agreed-upon service levels.

Usernames and Passwords

You should provide a list–updated regularly–of the usernames and passwords for any accounts you have. If you’re like most people, there are probably dozens–and that’s exactly why you’ll need to prepare this list.

Include the credentials for any online services you use. That can include bank accounts, investment accounts, loan accounts, utilities, benefit plans, or even informational services.

Make a list of all services you use that require usernames and passwords, over at least a 90-day period. That will probably enable you to produce a complete list. But plan to update the list at least once a year, or anytime you change credentials in the meantime.

List of Locations of Personal Affects and Instructions

You probably have certain important and/or valuable mementos. This can include jewelry, photos, personal correspondence, or valuable personal items. Your list should indicate where these are located, why they’re important, and if they have any significant monetary value.

You can use this list as a kind of catchall for any important information that isn’t disclosed in the categories above. Think about what you have that’s important, but not entirely official. If it’s important to you, it could be important to your loved ones after your death.

Feeling overwhelmed? There's no need. Mama Fish Saves has put together a wonderful “fill in the blank” binder that will walk you through everything you will need.

Keeping Your Legacy Binder Safe–Yet Available When It’s Needed

This is a bit of a balancing act. Because your legacy binder will contain an incredible amount of extremely valuable information, it has to be kept someplace safe. At the same time, it should be readily available if it’s needed on short notice.

It should be kept under lock and key in a location in your home that at least two people know about. The reason for having more than one person know the whereabouts is just in case the trusted person is not available, there will be a backup. Three might be even better, but you have to be careful making that much information available to too many people.

It might even be a good idea to have a backup legacy binder in a remote location. That would provide an alternate copy in the event your home is destroyed in a fire, flood or earthquake.

If the storage location is locked–and it should be–several keys or combinations should be available to your loved ones. You’ll want to set it up in such a way that your loved ones will have access when needed, but you’ll also be protecting the information from unintended third parties.

While it may be possible, and even easier, to store this information on a computer, it can also be a major security risk. The loss of your computer, or the information it contains, could create an identity theft nightmare.

It may not necessarily be easy, or convenient to create and store this information, but it’s entirely necessary. Or at least it will be at the time of your death. It’s one of the best things you can do for your loved ones.

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ChooseFI seeks to uncover helpful services that help you be financially resilient. However, we may receive compensation, at no cost to you, from the issuers of some products mentioned in this article, including from CardRatings for our coverage of credit card products. Opinions are the author’s alone, and this content has not been provided by, reviewed, approved or endorsed by any of these entities. See our disclosures for more info.

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