Estate planning is crucial for everyone, especially people of color. Many Black and Hispanic families are less likely to have an estate plan, leading to challenges when a loved one passes away. Black inheritance and Hispanic inheritance often face drawn-out probate processes, fractional inheritance and other factors that degrade generational wealth. Estate planning for people of color can ease the pain of a loved one’s passing and better concentrate wealth for successive generations. Beck, Lenox & Stolzer provide discussion points here on estate planning needs among Black and Hispanic individuals.
What Happens when You Don’t Have an Estate Plan?
When someone dies without a will or estate plan, their assets are distributed according to state laws. This may not align with their wishes and will likely not serve the best interests of their inheritors. Inheritance without an estate plan can be particularly problematic for families with modest estates, where the main asset is often the family home.
Without a clear plan, the home might have to be sold to settle debts or provide an equal inheritance, leaving family members without a place to live and undoing their financial windfall. The home may also split into fractional ownership among the children, making it difficult for them to derive value from the inheritance.
Why are Black and Hispanic Individuals Less Likely to have an Estate Plan?
According to a report by the Center for Retirement Research, Black and Hispanic individuals are significantly less likely to have a will compared to white individuals. There are several reasons for this disparity, such as:
- Cultural taboos around discussing death and inheritance
- A lack of access to financial education
- Systemic barriers to estate planning resources
How Does This Affect Inheritance?
The lack of an estate plan means that Black and Hispanic families are less likely to pass down wealth. Without a will, managing and distributing an estate can become complicated and costly, often reducing the inheritance that reaches the next generation. This perpetuates the racial wealth gap, making it harder for families of color to build and sustain wealth over time.
A Struggle to Find Legal Documents and Inheritance: Zoë Watkins’ Story
Zoë Watkins shared her personal story in an op-ed for Teen Vogue. When her father, Ricky Watkins, passed away, she and her sister struggled to find important documents, like his will and insurance policies. Zoë’s story shows that the simple act of forgetting valuable documents can complicate probate, prolong the inheritance process and make a difficult time even more difficult for your children.
What Can Be Done to Improve Estate Planning among People of Color?
Improving estate planning among people of color requires addressing several key issues. One avenue is to enhance education and awareness through targeted financial literacy programs. In doing so, more families can understand the importance of estate planning and learn how to get started.
Increasing access to affordable estate planning services can also lower barriers for families to create wills, trusts and other essential documents. On the other hand, estate planning professionals should also train in cultural sensitivity to understand and respect cultural differences.
By focusing on education, accessibility and cultural sensitivity, we can significantly improve estate planning for people of color. Over time, this can improve Black and Hispanic inheritances, helping bridge the racial wealth gap.
Start Building Your Family’s Legacy
Estate planning is a vital step in securing your family’s future. If you haven’t started your estate plan yet, now is the time. Contact our law firm today to request a free phone consultation or schedule one online and learn more about how we can help you create a plan that protects your loved ones.
Key Takeaways
- Importance of Estate Planning: Proper estate planning is crucial for everyone, particularly Black and Hispanic families, to manage and pass down wealth effectively.
- Challenges Without a Plan: Without an estate plan, assets are distributed according to state laws, which can result in the family home being sold and family members left without a place to live.
- Disparity in Estate Planning: Black and Hispanic individuals are significantly less likely to have an estate plan due to cultural taboos, lack of financial education and systemic barriers.
- Zoë Watkins’ Story: Personal experiences like Zoë Watkins’ highlight the challenges faced when a family member dies without a proper estate plan.
- Steps to Improve Estate Planning: Education, access to affordable resources and cultural sensitivity are essential to improving estate planning among people of color.
References: Center for Retirement Research (Aug. 15, 2023) “Wills, Wealth, and Race” and TeenVogue (Jul. 8, 2024) “Estate Planning for Families of Color Is an Issue We Need to Talk About More | Teen Vogue”
