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Opportunities for Tax Savings Using a Section 1031 Exchange

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by Morgan Norris

What is a Section 1031 exchange? exchange-money

An exchange using Section 1031 of the Internal Revenue Code occurs when you sell an investment property and subsequently purchase another similar property within a certain amount of time.  This exchange is also known as a “like-kind” exchange, and can be used to postpone paying tax on the gain from the property sale if all the IRC requirements surrounding the exchange are met.  A Section 1031 exchange is reported on Form 8824, Like-Kind Exchanges.

Who qualifies?

Owners of investment and business property; including individuals, C corporations, S corporations, Partnerships, LLC’s and trusts can all qualify to take part in the Section 1031 exchange.

What are the requirements?

There must be an exchange of properties.  Examples of property exchanges include:  a simultaneous swap of one property for another or a deferred property exchange.  A deferred exchange allows you to dispose of a property, and then identify and purchase another property within a certain window of time.  Two time limits must be met in order to avoid a taxable event during a deferred exchange.  The first time limit requires you to identify potential replacement properties within 45 days from the date of the original property sale.  Your identification of the potential property must be in writing and must follow certain additional rules in order to be valid.  The second time limit requires that the replacement property be received and the exchange completed no later than 180 days subsequent to the sale of the original property or the extended due date of the income tax return for the tax year in which the relinquished property was sold, whichever is earlier.  The replacement property must be substantially the same as the property identified in the original paperwork issued.  There is no limit on how many times, or how frequently you can participate in a Section 1031 exchange.

Ways in which taxable gain may result

The exchange can include like-kind property exclusively, or a combination of like-kind property and cash, liabilities and/or non-like-kind property.  Exchanges consisting of cash, debt relief or non-like-kind property may trigger some taxable gain in the year of the exchange.  Taxable gain may also be generated from taking possession of cash from the sale of the relinquished property.  A Section 1031 exchange requires that a third party, such as a qualified intermediary, hold the proceeds from the original sale until the full exchange is complete.  Your real estate agent, broker, accountant or attorney may not act as your qualified intermediary.  Additional stipulations are also placed on the qualified intermediary.

Depreciation recapture may also be the result of certain exchanges.  This is taxed as ordinary income, and is usually the result of swapping items that are not necessarily of like-kind, such as improved land with a building for unimproved land without a building.

The fine print

A properly constructed Section 1031 exchange allows one to defer; but not forgive, taxable gain.  It is pertinent that the basis in each additional property purchased be tracked until the last replacement property is eventually sold.  Once this occurs, taxable gain will be calculated using the basis schedule.

Morgan ([email protected]) is a tax senior at Langdon & Company LLP.  She has experience with individual and corporate tax preparation.  Please contact our office if we can provide additional information.

Are YOU a Victim of Tax Identity Theft?

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by Susan Dean

If you have received a 5071C letter from the Internal Revenue Service (IRS), you may indeed be a victim of tax identity theft. The purpose of the 5071C letter is to inform you that the IRS has received a tax return with your name and/or social security number and need to verify your identity. In an effort to protect the taxpayer, the letter provides two options to contact the IRS and confirm whether or not you filed your return. Taxpayers may use the idverify.irs.gov site or call a toll-free number on the letter. Due to the high-volume of calls, the IRS-sponsored website is the safest, fastest option for taxpayers with web access.

Below is a Taxpayer Guide to Identity Theft posted by the IRS.

ID theftWhat is tax-related identity theft?

Tax-related identity theft occurs when someone uses your stolen Social Security number to file a tax return claiming a fraudulent refund.

Generally, an identity thief will use your SSN to file a false return early in the year. You may be unaware you are a victim until you try to file your taxes and learn one already has been filed using your SSN.

Know the warning signs

Be alert to possible identity theft if you receive an IRS notice or letter that states that:

  • More than one tax return was filed using your SSN;
  • You owe additional tax, refund offset or have had collection actions taken against you for a year you did not file a tax return;
  • IRS records indicate you received wages from an employer unknown to you.

Steps to take if you become a victim

  • File a report with law enforcement.
  • Report identity theft at gov/complaint and learn how to respond to it at identitytheft.gov.
  • Contact one of the three major credit bureaus to place a ‘fraud alert’ on your credit records:
  • Contact your financial institutions, and close any accounts opened without your permission or tampered with.
  • Check your Social Security Administration earnings statement annually. You can create an account online at ssa.gov.

If your SSN is compromised and you know or suspect you are a victim of tax-related identity theft, take these additional steps:

  • Respond immediately to any IRS notice; call the number provided
  • Complete IRS Form 14039, Identity Theft Affidavit. Use a fillable form at IRS.gov, print, then mail or fax according to instructions.
  • Continue to pay your taxes and file your tax return, even if you must do so by paper.

If you previously contacted the IRS and did not have a resolution, contact the Identity Protection Specialized Unit at 1-800-908-4490. We have teams available to assist.

How to reduce your risk

  • Don’t routinely carry your Social Security card or any document with your SSN on it.
  • Don’t give a business your SSN just because they ask – only when absolutely necessary.
  • Protect your personal financial information at home and on your computer.
  • Check your credit report annually.
  • Check your Social Security Administration earnings statement annually.
  • Protect your personal computers by using firewalls, anti-spam/virus software, update security patches and change passwords for Internet accounts.
  • Don’t give personal information over the phone, through the mail or the Internet unless you have either initiated the contact or are sure you know who is asking.

The IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels.

Report suspicious online or emailed phishing scams to:[email protected]. For phishing scams by phone, fax or mail, call: 1-800-366-4484. Report IRS impersonation scams to the Treasury Inspector General for Tax Administration’s IRS Impersonation Scams Reporting.

This excerpt and additional Q&A information on Identity Theft can be found on the IRS website.

Financial Considerations Before Tying the Knot

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by Dwayne Murphymarriage

There are a number of things to consider when getting married among them are various financial considerations. Below are just a few items to discuss with financial implications:

  • Discuss past financial issues and future goals such as:
    • Current income, debt and spending habits.
    • Career paths and goals – such as are there plans in going back to school, career changes or job relocations.
    • Children, how many, and if they will be in day care or if one parent will stay home and if they plan or want to go back to work at some point.
    • Whether you might have an older parent living with you in the future and all the financial costs that would be involved.
    • Retirement planning and goals – as in your current situation, what your end goal is and how you plan to get there. Then determine if you want to start a combined retirement account or keep your individual retirement accounts separate.
  • Discuss who will handle the finances:
    • While you may want to designate one of you to handle the finances, both of you should be aware of your goals, spending habits and investments. This will make both of you feel responsible for saving and want to help contribute.
  • Joint or separate accounts?
    • Joint Accounts
      • Trust is the key here as this is probably the most convenient as all the money goes in and comes out of one account. However, if one of you makes more money or has more debt than the other then it could seem unfair to share everything.
      • Another option is to share a common account as well as keep separate accounts. The common account would be for common bills and to save for common goals such as a house. The separate accounts would be for individual spending habits. The issue here is how much each of you will contribute to the joint accounts, especially if one of you makes considerably more than the other.
    • Separate Accounts
      • This could be the easiest solutions for people with large balances in accounts that would be a hassle to move and not having to worry about opening another credit card in both names. The issue here is who is responsible for what bills and for saving towards common goals.
    • Tax considerations
      • First, understand the tax brackets and how your new income will be affected. Then update your withholding form W-4 and applicable state form to adjust the amount of taxes withheld from your paycheck. This hopefully should keep you from getting a shock come tax time.

In conclusion there are a number of things to consider when getting married and lot of them have financial implications. Hopefully by discussing some of the items above it will help to achieve a healthy financial marriage.  Contact our office for additional tax advice.

Dwayne ([email protected]) is an Audit Senior with Langdon & Company LLP.  He mainly works with various types of non-profit associations.

The Importance of Separation of Duties

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by Katie Anthony

It is important to have levels of separation of duties in your business. You may say that you are a very small business and cannot afford to have many employees. That may be true, in which case you can add approval and double sign-offs on items of significance as well as review of certain processes. You may be in a situation where you do not even have enough employees to do this. In such a case, it might benefit your company to set up a monthly or quarterly review by an outside accounting firm.

You may be asking why separation of duties is so important. A big reason is that although a greater number of frauds are perpetrated by employees low on the ladder, greater amounts are stolen by employees at the management level. The ACFE Report to the Nations on Occupational Fraud and Abuse: 2014 Global Fraud Study reports that employees committed 42% of occupational frauds but caused a median loss of $75,000, while executives committed 19% of occupational frauds with a median loss of $500,000. These high level employees are trusted and intelligent, so they are able to get away with the fraudulent activities for a longer period of time, enabling them to steal larger amounts of money.fraud triangle

There are three elements to occupational fraud, which are opportunity, rationalization, and pressure, as credited to Donald Cressey. He believed that these three elements must all be present for an ordinary person to commit fraud (Fraud Examiners Manual: 2014 US Edition).

Let’s start with rationalization. You may not think you are able to influence someone else’s rationalization. However, some people rationalize fraudulent actions by saying that they are owed what they are stealing from the organization because they feel underappreciated. You need to take steps to make sure that you pay your employees appropriately for their roles and that you do things occasionally to show your employees that you appreciate them. Employees sometimes even rationalize their behavior based on what they see employees higher than themselves doing. That means you! Keep in mind that your employees are watching you to set the tone of the business.

While you cannot remove pressures employees feel from those outside of your organization, you can make sure that you don’t put too much pressure on them from within. This means doing evaluations that are not only one-sided, but rather structured so that your employees can give feedback about their workloads and stress levels. If you overwork your employees they may feel pressure to take shortcuts that eventually lead to fraudulent actions.

Last but not least, is opportunity. Separation of duties and reviews can really help with this element. If employees feel that no one looks at their work, they may take that opportunity to begin stealing, especially if the other two elements of the fraud triangle are present. By adding separation of duties and reviews, you are filling a gap that will help keep your business healthy. If, despite all your precautions, one of your employees IS stealing, separation of duties and reviews will help catch them. The ACFE Report to the Nations on Occupational Fraud and Abuse: 2014 Global Fraud Study goes on to show that review is second only to a tip in discovering frauds in small businesses.

While no plan to prevent and detect fraud is perfect, each step you take will help. Langdon and Company LLP knows that you want to keep your business healthy and thriving. L&C can help you define the duties in your processes that need separation as well as provide review services for your organization. Contact our office today with any questions or concerns you have.

Katie ([email protected]) is an Audit Staff at L&C and works with a variety of clients.

SSARS 21: Statement on Standards for Accounting and Review Services: Clarification and Recodification

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by Lee Byrd

Representing the most significant changes to the compilation and review literature in decades, the AICPA Accounting and Review Services Committee recently issued Statement on Standards for Accounting and Review Services (SSARS) No. 21. The guidance aids in drawing a definitive line between preparation and reporting services and is composed of four sections as follows:

  • Section 60 – General Principles for Engagements Performed in Accordance With Statements on Standards for Accounting and Review Services, provides a foundation for the other three sections and guides professionals on their responsibilities related to engagements performed in accordance with SSARS.
  • Section 70 – Preparation of Financial Statements, applies when an accountant is engaged to prepare financial statements but is not engaged to perform an audit, review or a compliation on those financial statements. Professional judgment should be used in determining the type of engagement requested by the client (i.e. whether the CPA is engaged to prepare financial statements or simply assist in their preparation). A report is not required for a preparation engagement but the CPA should include a legend on each page of the financial statements stating, “no assurance is provided.”
  • Section 80 – Compilation Engagements, applies when an accountant is engaged to perform a compilation engagement. The guidance provides new compilation report language, distinguishing this report from an assurance engagement report for audit or review services. CPAs may add additional paragraphs for explanatory purposes.
  • Section 90 – Review of Financial Statements, applies when an accountant is engaged to perform a review of financial statements. The accountants’ review report has been updated to require the use of headings in the report and the name of the city and state of the CPA’s issuing office.

Successful business group.CPAs are required to begin using SSARS 21 for financial statements with periods ending December 15, 2015 and thereafter; however, the standard allows for early implementation. The standard also requires a signed engagement letter for all SSARSs engagements, signed by both the CPA and management or those charged with governance. Additionally, while audit, review and compilation engagements require participation in a peer review program, preparation services do not fall within any of the aforementioned categories and therefore, are not subject to peer review.

Langdon & Company LLP‘s accountants are very familiar with this new standard and would be happy to answer any questions you may have.  Please contact our office for additional information.

Lee Byrd ([email protected]) is an Audit Manager at our Firm and has over 7 years of experience with a variety of clients.

Spring Cleaning: Document Retention Policies for Non-Profits

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by Brittany Powell spring-cleaning-office

Determining what documents and files you need to keep can be a daunting task and all too often turns into a case of “I’ll keep this…just in case.”  Establishing a formal document retention and destruction policy for your non-profit organization can help prevent clutter from piles of unneeded documents.  In fact, a document retention policy is one of several policies that the IRS Form 990 asks specifically if a nonprofit organization has.

The IRS Form 990 instructions define a document retention and destruction policy as a policy that “identifies the record retention responsibilities of staff, volunteers, board members, and outsiders for maintaining and documenting the storage and destruction of the organization’s documents and records.”  As the National Council of Nonprofits points out in its article, “Document Retention Policies for Nonprofits,” a written document retention policy provides consistency in the document retention/destruction habits of both staff and volunteers.

So, as your organization is spring cleaning, what documents should you keep and what can be tossed?  The following categories are derived from the AICPA’s sample document retention policy and provide a guideline for how long certain documents should be kept.

Documents that should be kept permanently:

–          Audit reports

–          Correspondence regarding legal and important matters

–          Deeds, mortgages, and bills of sale

–          Determination letter from the IRS

–          Tax returns

–          Articles of Incorporation, Bylaws, etc.

–          Minutes of board meetings and resolutions made by the board

–          Retirement and pension records

–          Trademark registrations and copyrights

Documents that should be kept for 7 years:

–          Expired contracts, mortgages, notes, and leases

–          Payroll records and summaries

–          Personnel files for terminated employees

–          Timesheets

–          Withholding tax statements

–          Invoices (to customers and from vendors)

Documents that should be kept for 2-3 years:

–          Bank reconciliations and statements

–          General correspondence

–          Duplicate deposit slips

–          Employment applications

–          Inventory records

–          Correspondence with customers and vendors

These guidelines can help your organization begin establishing its own document retention policy and guidelines.  However, as we become a more technologically-driven society, it is important to be consider documents stored in the cloud or on a server and to have a back-up plan in place for your electronic documents.  Additionally, the National Council of Nonprofits points out in its article that organizations should give consideration to email records and how they fit into the procedures defined in the document retention policy.

If you have additional questions or would like additional information, please contact our office.

Brittany Powell ([email protected]) is an audit senior at Langdon & Company LLP and has experience with a broad range of non-profit clients.

The Interaction of Pell Grants and Tax Credits

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by Rebecca Lunnpell grant

Federally funded Pell Grants assist millions of students annually. However, for students with these scholarships, the process of claiming tax credits is complex and often confusing. As a result, students with the greatest financial need may be foregoing additional tax benefits available.

Based on an IRS publication (see link below), under current law a Pell Grant student can choose to allocate his or her Pell Grant funds either to qualified tuition and related expenses (QTRE) or to living expenses (up to the amount of actual living expenses), which constitutes taxable income. Most students and parents do not understand this option, so often families allocate all QTRE to the Pell Grant funds, leaving little or no QTRE to allocate to an educational tax credit.

For 2014, the American Opportunity Tax Credit (AOTC) provides a 100% credit for the first $2,000 of QTRE and a 25% credit for the next $2,000, for a total credit up to $2,500. As noted in the IRS publication, if a student’s QTRE exceeds scholarships by $4,000, the student would still qualify for the maximum AOTC credit. However, if the QTRE exceeds scholarships by less than $4,000, the student may benefit from including some of the Pell Grant in taxable income in order to claim a larger AOTC. It is important to note that any scholarship that is allocated to living expenses must be included in taxable income on the student’s (not the parent’s) tax return.

If you need additional assistance in understanding how to obtain the maximum tax benefit with a Pell Grant scholarship, the tax department at Langdon & Company LLP is pleased to assist.

Please click here for detailed examples of the interaction of Pell Grants and tax credits.

Rebecca Lunn ([email protected]) is a Senior in our Audit Department working primarily with the non profit, and health care industries.

college diploma

ABLE (Achieving a Better Life Experience) Act – A new way to save for children with disabilities

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by Meagan Bulloch

The ABLE Act amends Section 529 of the IRS Code of 1986 to create tax-advantage savings accounts for individuals with disabilities.  The ABLE Act will provide individuals with disabilities the same types of flexible savings tools that all other American have through college savings accounts, health savings accounts and individual retirement accounts.  Most importantly this Act will prevent money saved through 529-ABLE accounts from counting against an individual’s eligibility for federal benefits programs.

As of December 19, 2014 this was signed into law by President Barack Obama. o-SAVINGS-ACCOUNT-facebook

What you should know (Adapted from NDSS):

  1. 529-ABLE accounts are “tax-advantage” savings accounts for individuals with disabilities and their families.  Income earned by these accounts will not be taxed.  Also the money will not be considered an asset when determining eligibility for government supported benefits.
  2. Who is eligible – Any individual with significant disabilities with an age of onset before 26 years of age is eligible.  Eligible individuals can be over the age of 26, but must have documentation of disability that indicates age of onset before the age of 26.  
  3. How much money can be saved – Under current tax law, an individual can contribute a maximum of $14,000 into an ABLE account and not be subject to gift taxes.  The total limit over time that can be made into an ABLE account will be subject to the individual state and their limit for education-related 529 savings accounts.  The first $100,000 in ABLE accounts will be exempt from the SSI $2,000 individual resource limit.  If the ABLE account exceeds $100,000, the beneficiary would be suspended from eligibility for SSI benefits, but would continue to be eligible for Medicaid.    
  4. What expenses qualify – A “qualified disability expense” is considered an expense incurred as a result of the beneficiary living with their disability.  These would include education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services and other expenses which will be developed in 2015 by the Treasury Department.   
  5. Can I have more than one ABLE account – No, the Act limits the opportunity to one ABLE account per eligible individual. 
  6. How is an ABLE account different from other options – ABLE accounts allow more choice and control for the beneficiary and their families.  The cost of opening an account will be considerably less than setting up either a Special Needs Trust or Pooled Income Trust.  The ABLE account will also be less complicated to set up and owners will have the ability to control their funds.  This new approach also offers individuals living with a disability the ability to work and contribute to their own support and save for their own future with fear of losing necessary support and services.

Meagan Bulloch ([email protected]) is an audit manager at Langdon & Company LLP focused primarily on non-profit clients.

 

NC 2014 Tax Law Changes

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by Leonora Bowman

Yea!  North Carolina reduced the individual income tax rate beginning in 2014.  That means that I will pay less tax to NC when I file my 2014 Form D-400, right?  Like all tax questions the answer is “It depends.” NC flag

The following was taken from the North Carolina Department of Revenue’s Instructions for Individual Returns Form D-400:

What’s New : 

For information about any additional changes to the 2014 tax law or any other developments affecting Form D-400 or its instructions, go to www.dornc.com.

Session Law 2013-316, House Bill 998, An Act to Simplify the North Carolina Tax Structure and to Reduce Individual and Business Tax Rates, was signed into law on July 23, 2013. The individual income tax rate was reduced, the N.C. standard deduction was increased, and many deductions and tax credits are no longer available for tax years beginning on or after January 1, 2014.

Change in tax rate.

The individual income tax rate is reduced to a flat 5.8 percent for tax years beginning on or after January 1, 2014 and to 5.75 percent for tax years beginning on or after January 1, 2015. N.C.

Standard Deduction or N.C. Itemized Deductions. You may continue to claim either the N.C. standard deduction or N.C. itemized deductions, however, both have changed. (See Page 8)

• N.C. standard deduction has increased for each filing status,

• No additional standard deduction is available for taxpayers age 65 or older, or blind.

• N.C. itemized deductions are no longer identical to federal itemized deductions and are subject    to certain limitations.

N.C. Itemized Deductions.

• Qualified home mortgage interest and real estate property taxes are allowed as deductions. The sum of those deductions cannot exceed $20,000,

• Charitable contributions allowed as a deduction on the federal return are allowed without limitation.

 Deduction for Other Retirement Benefits.

There are no longer deductions available to certain taxpayers for up to $4,000 for federal, state, or local government retirement benefits or up to $2,000 for private retirement benefits.

Deduction for Net Business Income that is Not Considered Passive Income.

There is no longer a deduction available to certain taxpayers for up to $50,000 of net business income included in federal adjusted gross income.

Deduction for Contributions to N.C. College Savings Program.

There is no longer a deduction for contributions made during the taxable year to an account in the Parental Savings Trust Fund of the State Education Assistance Authority (North Carolina’s National College Savings Program – N.C. 529 Plan).

N.C. Standard Deduction Amounts for Most Taxpayers:

Filing Status                                                    Standard Deduction

Single                                                                           $ 7,500

Married Filing Jointly/Qualifying Widow(er)                 $15,000

Married Filing Separately                                             $ 7,500

Head of Household                                                     $12,000

N.C. Personal Exemption Allowance.

You may no longer claim a personal exemption for yourself, your spouse, children, or any other qualifying dependents.

Credit for Children.

Amounts are increased from $100 to $125 per qualifying child for some taxpayers. If you are allowed a federal child tax credit under section 24 of the Code you are allowed a tax credit for each dependent child for whom a federal credit was allowed. The credit amount is based on your filing status and adjusted gross income, as calculated under the Code.

Child and Dependent Care Credit.

North Carolina no longer allows a tax credit for child and dependent care expenses.

Earned Income Tax Credit.

North Carolina no longer has a State earned income tax credit.

N.C. Education Endowment Fund:

Contribute to the N.C. Education Endowment Fund by making a contribution or designating some or all of your overpayment to the Fund.

nc-general-assembly-entrance-304xx2100-3150-0-3Analysis of these changes:

So who will pay higher taxes?  “It depends.”  Families who could pay more are as follows:

Retirees can no longer deduct a portion of their retirement benefits.

Small business owners who were previously allowed to deduct the first $50,000 of self-employment income from their NC taxable income.  For a married couple, who both have self-employment income that equals or exceeds $50,000, they will now be taxed on an additional $100,000 previously excluded.  The tax on that is $5,800.  Whether their NC tax will be higher or lower depends on their other taxable income and the other changes in deductions allowed.

Young families will no longer receive a child and dependent care credit or an earned income tax credit.

All wage earners in NC were required to resubmit withholding allowance forms to their employers in January, 2014 which would adjust the amount of state income tax withholdings typically taken from their pay.  The intent by the state Department of Revenue was that the new allowances would better align with the law changes, however each individual taxpayer’s circumstances is different.  NC taxpayers will have a better idea of how their state income tax withholdings match their actual income tax liability with the filing of their 2014 NC Individual Income Tax Returns.  Should adjustments be necessary to increase state income tax withholdings in 2015, revised withholding allowance requests may be filed by employees with their employers at any time or alternatively quarterly estimated tax payments may be scheduled.

 

The Tax Team at Langdon & Company LLP will be happy to discuss these NC tax law changes with you.  Please contact our office if you have additional questions.

Leonora “Lee” Bowman ([email protected]) is a Manager in our Accounting Services practice.  She has over 25 years of experience in taxation and also specializes in multi-dimensional corporate accounting across various states.

The “Legacy Drawer”

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by Brittany Spragins

While it is extremely hard to think about, someday you will pass away.  What will happen to your spouse, kids, grandkids, and other loved ones?  Have you heard of the “Legacy Drawer?”  Here is what it contains: 

  • Cover Letter – this will explain the purpose and organizational system of the drawer.
  • A Last Will and Testament (a “will”) – Make sure to have an updated copy of your will.  Without one, the government divides your assets as they see fit; your own wishes are irrelevant.  If you have children, the government also picks their guardian.
  • Make sure that the will is updated after major life events such as marriage or divorce, birth or adoption of a child, or moving to a new state.
  • Make sure that this contains the names of the executor and Power of Attorney for the estate.
  • Financial Information – anything involving money
  • Include account names, numbers, and approximate balances
  • Credit cards accounts and online login information
  • Loan Documents
  • Safe Deposit Box location and information
  • Insurance Provider Information – include a summary page of all types of insurance
  • Policy type
  • Policy Numbers
  • Provider Contact Information
  • Funeral Instructions – Include as much as you can to ease the burden on your family.  Your family will already be grieving your loss, so if you have songs or locations picked out, let them know.
  • Legal Documents – copies of birth certificate, marriage license, car titles, house deeds, social security card, etc. If you think it may be needed to help settle your estate, and then include it in here.
  • A letter to your loved ones- They will be missing you and a personalized letter from you reminding them of your love will be a special gift for them.  You can leave remaining pearls of wisdom, or just the opportunity for them to hear your words in a lasting legacy.

Update the information periodically, if you get a new bank account or pay off a loan, then just add or remove the file accordingly.

I realize that there are a lot of items to include, and it will take some time to locate and organize these, but stick to it.  If it would take time to do now, imagine the stress on your loved ones if they are doing it because you are gone.  This is one way that you can ease the burden on your family and remind them how much you love them.
Outline provided by Dave Ramsey http://www.daveramsey.com/article/legacy-drawer-keep-your-family-prepared/lifeandmoney_relationshipsandmoney/.
Brittany Spragins ([email protected]) is a staff accountant with Langdon & Company LLP and works with our healthcare consulting and tax departments.