You Need a Legacy Binder of Your Important Documents. Here's What to Include

It's understandable to avoid thinking about the tasks that need to be done before you die, but doing so can make things significantly easier for the people you love. Grief is hard enough without your survivors having to guess what your bank login credentials were or dig through every file folder in the house looking for a copy of your will.

That's why creating a legacy binder is so important. This item — alternatively called a legacy drawer — is a collection of your most important documents and details. From your will and insurance policies to passwords and celebration-of-life wishes, the binder offers your family access to everything they should need in one place. Having a binder has immediate benefits, too, like making it easier now to talk to your loved ones now about your life insurance.

Here's how to build a legacy binder, from what it should contain to where to keep it to who shouild know of its existence and location.

Assembling your legacy binder

When is the right time to start?

Life is unpredictable, so it's best to start building a legacy binder well before you think you will need one. Right away is ideal.

Failing an immediate start, a good motivator is the approach of a major life milestone, like retiring, getting married or having a child. Assembling your legacy binder also fits well with writing or updating your will.

Don't feel pressured to have all your documents ready at the start. A legacy binder can and should be updated as your circumstances change. Begin the collection now, and add to it over time. That's better than scrambling to locate everything you need in the midst of a stressful divorce or health crisis.

Basics for your binder

Despite its name, a legacy binder doesn't have to be a literal three-ring binder, although that's certainly an option, provided that you have a secure place to store it.

If you prefer a physical copy of your documents, a binder or expandable file folder with labeled tabs can help keep everything organized. You don't need to invest in a bunch of supplies, but a little structure — such as tabs or dividers for each account or set of records — will make using it easier for your family.

If you lack a fireproof safe in your home — a recommended location, as detailed below — consider buying a binder that is fire- and water-proof, or enclose a regular binder in a special bag or box that resists those perils.

That said, many people today choose to store their legacy binder digitally. You can scan everything you need and store those files in a secure cloud folder (such as Google Drive, Dropbox or OneDrive). This method has the advantage of being easier to update and share with family members who don't live nearby. If you need help getting started, or aren't sure how to organize your information, there are plenty of legacy binder templates online (such as this one) that can guide you through the process.

If you're unsure if a hard copy or electronic legacy binder is better for you, keep in mind that it never hurts to have both, for maximum protection. Naturally, you'll need to remember to keep both of them up-to-date.

What to include in your legacy binder

Your legacy binder should include all important documents and information that your loved ones, or designated others, will need to manage your affairs during a medical emergency or after your death. The goal is to minimize stress and potential conflicts between family members.

Here's a breakdown of what every legacy binder should include:

1. Personal information

• Copies of your Social Security card and government-issued IDs (passport, driver's license, etc.)
• Insurance details (policy numbers, names of policyholders, names of beneficiaries, your agent's contact info, etc.)
• Emergency contact list
• Passwords, usernames, answers to security questions and PINs for online accounts

2. Legal documents

• Will and trust documents, plus the names of your executor and powers of attorney
• Birth certificate, marriage certificate, divorce papers and custody agreements

3. Financial accounts

• Bank and investment account details (checking accounts, 401(k)s, brokerage accounts, etc.)
• Credit card and loan information
• Life insurance policy information
• Monthly bills or recurring payments
• Personal and, if applicable, business tax returns

4. Property and assets

• Mortgage account details (if you rent your home, your rental agreement or lease should be included instead)
• Vehicle titles and loan information
• Safe deposit box information

Storing and sharing a legacy binder

The number one rule? Don't leave the instructions for accessing your legacy binder inside the legacy binder. That information won't be much help if no one knows where to find the binder or how to open it.

Here's what to do when it comes to storage and sharing.

Best places to keep it

Assuming your legacy binder is a physical one, keep it secure but not secret. A fireproof, waterproof safe or filing cabinet is ideal. (As noted before, if you lack such a peril-resistant location, buy a binder that resists fire and water, or enclose it in a bag or box that does so.)

Some people opt to keep their physical legacy binder with their attorney or estate planner. If you go that route, it can be especially helpful to have a backup, physical or digital, so your family has what they need to access when the time comes. Also, don't forget to update that copy when your information changes.

For a digital binder, a clearly labeled and secure cloud folder will suffice.

Who needs to know about it?

Limit knowledge of where your binder is to as few people as possible. No need to share its location with your entire extended family.

You should tell the executor of your estate and the loved one you expect to be most closely involved in managing your affairs — like a spouse, child or best friend, if that person is not the executor. Two people with access is best, for the obvious reason of human mortality.

Whether the binder is physical or digital, make sure that those in the loop know exactly where it's located and how to access it. The last thing you want after you've spent time organizing everything is for the binder to be locked behind an unknown password or stashed somewhere no one can find it. Similarly, don't make access dependent on a lock combination or a key kept in a location known only to you, or use biometric authentication that you can enable only for yourself.

Back it up — just in case

If you opt for a physical legacy binder, it's a good idea to create a digital backup, as well. Otherwise, your documents could be vulnerable to damage or loss. A simple scan of key documents — saved to a secure cloud folder like Google Drive, Dropbox or OneDrive — can give you peace of mind that your documents won't disappear when needed most. If you don't have a scanner or printer, most smartphones have built-in tools or apps that make it easy to scan and upload documents.