This is not really a good way to organize your documents. You should think of the folders in in the TeX Live directory as equivalent to folders that belong to a particular application, and you wouldn't normally store your documents created by that application with the application.
So you should generally not keep your documents inside the texlive folder at all, but wherever makes sense for you within your home folder, just like any other documents you might have.
The only things that go in the texmf-local folder are local packages and TeX related stuff that is meant to be accessible to multiple users on a single machine. If you are the only user, there's little need to use this directory at all, but instead should use your local texmf folder. On a typical Linux system, your local texmf folder is located in ~/texmf; on a Mac, it's ~/Library/texmf; in Windows it's \texmf in your user folder. See How to have local package override default package for some more information on your local texmf folder and how it is used and organized.
So here's a basic organization first Linux/Mac, then Windows paths:
/usr/local/texlive/<year> Windows: C:\texlive\<year>
- Used only TeXLive; leave this one alone
/usr/local/texlive/texmf-local Windows C:\texlive\texmf-local
- System wide additions to your TeX distribution
/texmf (Linux); ~/Library/texmf (Mac); %USERPROFILE%\texmf (Windows)
- User additions to your TeX distribution
Any other document that you create (i.e. any regular user document created with TeX) should simply be placed in any folder that makes sense for your personal organization. For example, I have a folder for each course I teach, and subfolders for different semesters. I have folders for research topics and then subfolders for articles I'm writing on those topics. But these choices are very personal, and you should place your TeX documents in whatever folder structure makes sense for you just like you would any other kind of document you produce.
texmf-localvs. your usertexmffolder, I think. – Alan Munn Dec 05 '12 at 16:24texmf-localrather than~/texmffor these packages. On the other hand, if you think there's at least an outside chance that more than one user will operate on your computer, there's no downside (and quite some upside, AFAICT) to storing these additional packages underlocal-texmffrom the get-go. – Mico Dec 05 '12 at 16:28/usr/localrequires admin privileges, and the relevant folders are not trivially accessible via the Finder (although since Lion even ~/Library is no longer directly accessible in the Finder) so depending on the user skills, usingtexmf-localis just more of a pain. I don't know if this is as true for Windows or Linux, however. – Alan Munn Dec 05 '12 at 17:43texhashtexmf-local, whereas your personal tree is always searched and does not need to be hashed. So there are some advantages to using the personal tree, particularly if you want to regularly alter the content. – Joseph Wright Dec 05 '12 at 19:00sudomode. I find that I runtlmgrabout twice a week anyway to keep up with new and updated packages; given this setup, having to runtexhash(via sudo) isn't really much of an extra chore. Naturally, others may well feel rather differently about the burden imposed by these chores. – Mico Dec 05 '12 at 19:05