What does estate planning have to do with the wealth gap?

By Whitney Knox Lee, Esq., Founding Attorney of Wills for the People LLC

August 5, 2024

Racial wealth inequality has long plagued communities of color in the U.S., creating significant economic disparities. At Wills for the People, we believe estate planning is a valuable tool to advance racial wealth equity and to empower Black and Brown families. Here’s why.

Understanding The Racial Wealth Gap

The racial wealth gap refers to the significant variance in assets and wealth between different racial and ethnic groups. Historical and present-day factors like systemic racism and discriminatory policies have fueled this disparity. For example, land theft and the extermination of Indigenous nations that came with colonization, slavery, the centuries long exclusion of people of color from owning land or growing wealth, redlining, predatory lending, the over-incarceration of Black people, discrimination in education and employment, disparity in income, health inequity and more have left Black, Indigenous, and Hispanic families with far less wealth than white families.

The wealth gap is stark. According to recent studies, the median wealth of white families is significantly higher than that of Black and Hispanic families. Black families own about 23 cents, and Hispanic families about 19 cents, for every $1 that a white family owns. In Georgia, white households have 8 times the wealth of Black households; and in Atlanta, it's a staggering 46 times more. (Check out the Atlanta Wealth Building Initiative report: "Building a Beloved Economy" for more stats).

This gap isn't just about income—it's about accumulated wealth like property, investments, and savings passed down through generations. Estate planning, a customary ritual for affluent families, can help build and protect new or existing wealth and ensure it benefits future generations.

The Role of Estate Planning in Wealth Building

Estate planning involves managing and distributing assets through documents like wills, trusts, and powers of attorney. It's crucial for everyone to protect and grow their assets, not just the wealthy.

A solid estate plan ensures your assets are distributed according to your wishes. It provides security against state-imposed decisions on your estate and lowers the likelihood of financially and emotionally burdensome family disputes. Estate plans can also minimize tax liabilities, allowing more wealth to be passed on to the people or organizations of your choosing. For Black and Brown families who are already disproportionately impacted by the ongoing economic consequences of racism, the ability to direct our hard-earned monies to where we want them to go and to protect and grow these assets is vital to the economic, social, and political development of our families and communities.

Estate Planning Starts with Education

Education is the first step in effective estate planning. Many people, especially in communities of color, are unaware of its importance and options. At Wills for the People, we offer free seminars and workshops to demystify estate planning and provide practical advice on how to get started. Our sessions cover wills, trusts, powers of attorney, and more, and we offer tailored sessions for new homeowners, expanding families, LGBTQ+ families, blended families, families of incarcerated individuals, community organizers/activists, and other groups with unique needs.

We also offer individualized services and representation ensuring each client gets a personalized estate plan. Through our estate planning programs, education, and representation, our clients become equipped to make informed decisions that benefit them and their families during life and for generations to come.

Addressing Common Barriers to Estate Planning

Several barriers often prevent people from getting started with their plans. Among the top reasons for not having an estate plan are the belief that estate planning is only for the wealthy and simple procrastination.

Estate planning is not just for the wealthy. It is a vital tool for anyone seeking to protect their current assets and to grow the wealth they dream of. Parents, caregivers, and pet owners find estate planning essential for appointing guardians and making arrangements for their loved ones. Estate planning tools can be used to in protect major assets like the family home or beloved collections and family heirlooms. Estate planning can also involve life insurance and retirement planning, planning for aging and elder health care, and more.

While understandable, procrastination must be overcome. Make no mistake, time is of the essence with your estate plan. The process can seem daunting, but your attorney is there to help. Being able to rest assured that you are in good hands as you make decisions that may impact generations to come is one key benefit of working with an attorney. We are here to guide you and answer your questions to your satisfaction. Because of this, finding an attorney you can trust and communicate well with is crucial.

Another reason for procrastination is the belief that estate planning is prohibitively expensive. While it can be a significant investment upfront, the payoff and peace of mind is well worth it. Some attorneys offer payment plans, sliding scales, or free services at pro-bono events. At Wills for the People, we strive to make estate planning accessible by offering group sessions and virtual services to lower costs without sacrificing quality and value.

And cultural factors can also deter people from estate planning. At Wills for the People, we approach these sensitive topics with cultural awareness, respecting our clients’ values, traditions, and unique needs to help them navigate difficult conversations and make informed decisions.

The Impact of Intentional Estate Planning

Intentional estate planning can have a profound impact on reducing racial wealth inequality. By proactively managing and protecting their assets, families can build wealth that can be passed down through generations, thereby creating a foundation for economic stability and growth. This process not only benefits individual families but also contributes to the broader goal of economic equity within communities of color. On the other hand, failing to be proactive and intentional in planning for our estate can have dire consequences not only for heirs, but also to the individual while they are still alive!

Moreover, estate planning can help address the issue of heirs' property, which disproportionately affects Black families. Heirs' property refers to land or property that is passed on without a will or with a will but to multiple owners. This can result in fractured title and prevent that ability to use the value of the property as leverage for building wealth. Heirs’ property can be expensive to sort through because it can involve complex and time-consuming legal processes, and can harm the family relationships of individuals involved. This can lead to the loss of property, wealth, family culture and legacy. By creating a clear legally enforceable estate plan, families can avoid the pitfalls of heirs' property and ensure that their assets are preserved.

Conclusion

Estate planning is a powerful tool. By understanding and addressing the unique challenges faced by communities of color, we can help build and protect wealth within these communities. Through education, accessible services, and culturally responsive guidance, Wills for the People is committed to making estate planning a reality for all. We invite you to reach out to us at (770) 203-2047 to learn more about how we can help you secure your legacy.