More than 70% of Black Americans don’t have a will, and the consequence is a missed opportunity for Black Americans approaching what may be the most significant wealth transfer in history — an estimated $68 trillion wealth transfer over the next 25 years. The economic cost of inaction is particularly substantial given Black Americans’ median wealth is less than 15% of white families. The financial consequences are significant.
Protecting family assets is easier than it may seem. Key documents, including a last will, durable power of attorney, healthcare power of attorney, living will, and trusts, collectively safeguard assets, streamline the transfer process, and mitigate potential financial burdens on families.
An added benefit of estate planning, Childs says, is avoiding inordinate transfer taxes and probate costs, which can range from 3% to 8% without a proper estate plan. “A well-crafted estate plan can ensure that your assets are distributed in a tax-efficient manner to minimize the taxes your heirs will have to pay,” she said. “An estate plan can provide asset protection from creditors and lawsuits by deterring potential legal disputes and streamlining the distribution of your assets.”
Estate attorney Eraka L. Childs has made it her mission to dispel fears that hinder Black families from planning for their assets, emphasizing the need for everyone over 18 to create a plan and debunking misconceptions about age or wealth prerequisites for estate planning. “Estate planning is essential for everyone; it’s especially essential for Black women who inherit the many challenges of wealth gaps, historical trauma, and unjust policies,” Childs told ESSENCE. Considering what’s at stake, we turned to the Houston-based Childs Law Firm owner for insights on why Black women should prioritize estate planning.
Avoiding Last-Minute Pitfalls: Breaking the Silence on Estate Planning
One major obstacle arises from a lack of awareness and education surrounding estate planning, which often hinders Black women from initiating the process early. “We have a tremendous opportunity to educate ourselves on the importance of implementing early financial literacy, our financial legacy responsibilities, and how to grow, protect, and pass on our wealth,” Childs said.
Consequently, individuals resort to heavy-handed strategies within estate planning, including making abrupt decisions on allocating real estate investments or implementing trust funds. When made at the last minute, these approaches — intended to manage and distribute assets according to specific conditions outlined in a trust document, can create tension in family dynamics.
The necessity of early engagement in estate planning cannot be overstated, as it avoids last-minute pitfalls and ensures a more thoughtful and comprehensive strategy for securing one’s financial legacy.
Navigating Family Dynamics: Avoiding Challenges and Conflicts for Primary Caregivers
Primary caregivers responsible for managing finances often bear the weight of challenges in navigating family dynamics, leading to potential conflicts over inheritance decisions. “Black women need to have open and honest conversations with their family members, particularly those who may be impacted by their estate plans. This can help prevent misunderstandings or disputes after they are gone,” Childs said.
Childs underscores the vital importance of designating guardianship within an estate plan. She highlights the necessity for thoughtful consideration when selecting the person to assume this responsibility. “Sometimes, family members may not act in the best interest of the minor children. Therefore, it is essential to include non-family members as potential guardians, ensuring the children’s interests are prioritized,” she said.
Single mothers, in particular, face an added layer of complexity with guardianship considerations, often needing to prioritize their children’s interests over potential family conflicts. This dynamic further complicates matters for them. The fallout from taking a reactive approach underscores the importance of early engagement in estate planning to avoid the need for rushed decisions and ensure a more thoughtful and comprehensive strategy. Despite the challenges, investing early in thorough estate planning is worthwhile.
Future-Proofing Your Wishes: Adapting Estate Plans to Life’s Changes
Divorce, marriage, childbirth, starting a business, retirement — all of these life changes have distinct legal implications that demand careful consideration within an estate plan. “By working with an experienced estate planner, Black women can ensure that their plan changes over time as their life situation changes,” Childs said.
Whether adjusting beneficiary designations, revising wills, or addressing new assets, partnering with an estate planner ensures that plans are adaptable and evolving in response to shifting life circumstances.
Expressing Preferences in End-of-Life Care
End-of-life care choices are an essential aspect of healthcare directives. “For Black women, expressing preferences in healthcare directives involves considerations such as additional pain management, specific religious or cultural rituals during the dying process, and alignment with personal values,” Childs said.
By discussing personal preferences with attorneys, healthcare professionals, and loved ones, Black women can ensure their values and beliefs are honored in alignment with medical care. “Having these conversations in advance is essential to guarantee that their wishes are understood and honored, facilitating the provision of the highest quality healthcare,” she said.
Business Succession Planning for Black Women Entrepreneurs
Black women are the fastest-growing group of entrepreneurs in the US, and as such, Childs says, business succession planning is a crucial consideration. “Estate planning can help ensure that their business assets are protected if something happens to them and that the business can continue to thrive after their passing,” she said. The aim is to maintain a business’s ongoing leadership and ownership in the event of the owner’s passing, effectively reducing disruptions and ensuring its long-term success.
Succession planning typically involves identifying and preparing successors, whether family members, existing employees, or external candidates, and outlining the steps and measures necessary for the effective and seamless continuation of the business. It’s crucial for maintaining the business’s value, protecting assets, and fulfilling the vision and goals established by its original leadership. “Business succession planning can assist in guaranteeing that their legacy is managed in a way that aligns with their goals and vision,” Childs said.
Taking a proactive approach to estate planning enables Black women to safeguard their financial legacy, preserve family assets, and navigate life changes with resilience. According to Childs, early engagement is crucial to ensuring that plans are executed as desired.
