It’s estimated that 60-70% of Black Americans don’t have a will or estate plan.
Those are staggering numbers, especially considering that Black families are generating massive amounts of wealth. In 2021, there were 2.3 million Black-owned businesses.
Therefore, it’s imperative that Black families create a plan that will allow them to pass these businesses and wealth down through generations. A proper estate plan will also ensure financial security for their families in case they become incapacitated.
Estate Planning Is for Everybody – Not Only the Super Wealthy
It’s a common myth that estate planning is only for people with tremendous amounts of wealth. But this simply isn’t true.
Choose how you want your assets distributed after you die. If you have any assets, then you can guarantee someone will want them when you die. Without an estate plan, these assets may not be distributed the way you wish. Even if their market value is low, certain belongings carry with them sentimental value.
Think about it: when a loved one dies, it’s usually the jewelry, antiques, and furniture that family members are fighting over. Make it easier on your loved ones by deciding in advance how your assets should be distributed.
Choose who will take care of your minor children. Creating a will allows you to choose a guardian for your children if you die before they turn 18. If you don’t have a will that clearly spells out who you want to take care of your children, then the state will choose for you.
Make plans for your business. If you’re a business owner, an estate plan is crucial when it comes to inventory. Because inventory can be sold, there might be confusion as to handle inventory upon your death. It’s important to also consider creating a succession plan for your business – a document that outlines who will take over the business in your absence.
Your digital assets count in estate planning, too. Almost everybody has digital assets in 2021. Digital assets include social media accounts, online bill-pay, photo storage, business software and accounts, and more. You have the option to include login information in your estate plan.
Estate Planning Isn’t Only For Death
An estate plan doesn’t only come into play when you die. It applies if you become incapacitated as well. Nobody plans on becoming incapacitated - but it happens. And if you don’t have a proper plan in place, your loved ones will have to petition the court to get legal permission to take care of you (known as guardianship or conservatorship). This is expensive and time-consuming.
A healthcare power of attorney is a document that will allow you to decide the type of healthcare you wish to receive if you become incapacitated. This will ease the burden on your family members when they know they won’t have to make difficult decisions on their own.
For business owners, a financial power of attorney is especially important. This will allow someone to quickly step in to make decisions for the business in the event that you’re unable to run the business.
The Importance of a Revocable Living Trust
When you pass away without a trust, your assets are subject to probate. Probate is the legal process of administering someone’s assets after they die, and can be extremely expensive (and take several months). If your family is buried in probate fees, it means they might not see any of the wealth you accumulated during your life and hoped you’d pass down. And although it’s important, having a will doesn’t avoid probate.
But a revocable living trust does. It can save your heirs time and money, as your successor trustee will be able to pass your assets on to your beneficiaries without the need to wait for a court order. Revocable living trusts are also flexible, so you can change them throughout your life if your circumstances change.
A trust is what will allow you to provide for multiple generations of your family. You can build generational wealth by setting up a trust instead of simply naming beneficiaries outright. This is because beneficiaries who receive lump sums of money may spend it, leaving nothing for the next generation. Instead, consider giving beneficiaries access to a trust fund during their lives and then directing in the trust document that any left over assets be held for the next generation.
Conclusion
As a Black person living in America, you’ve likely overcome too much to cheat yourself of the crucial step of making an estate plan. A proper estate plan will make sure your family has security when you’re gone, and will allow you pass on your wealth through generations.
When you need help getting started on your estate plan, we’re here for you.
Call Santaella Legal Group, serving San Ramon, Danville, Dublin, Pleasanton, the Tri-Valley and Bay Area at (925) 831-4840.