Although Black Americans have the right to purchase homes after experiencing centuries of disparities, there are still significant disparities in homeownership and wealth accumulation for Black Americans in comparison to White Americans. These disparities are further exacerbated by Black Americans’ failure to engage in one of the most effective strategies that would help reverse the trend. This strategy, otherwise known as estate planning, is transformational in its ability to increase the generational transfer of homeownership and stop the wealth hemorrhage. An effective and comprehensive estate plan develops strong protection strategies to help families maintain what they have accumulated, even if it is not much.
When we look back at our history, we understand why we observe Juneteenth while acknowledging it as one of the stepping-stones towards homeownership. Juneteenth is a day that celebrates and commemorates the emancipation of Black Americans. It is also an acknowledgement of what we have achieved, as well as what we must do to protect our achievements and continue to propel us forward. Although one of those achievements is homeownership, it is incomparable to the rate of homeownership in other communities. The current Black homeownership rate is nearly 44%, which is seven percent lower than almost ten years ago. This number is extremely lower in comparison to white homeownership which is approximately 74%. There are many reasons for the disparity, however, one of the biggest ones is the role that ineffective or non-existent estate planning plays on generational homeownership and wealth.
While Black Americans are making some strides in homeownership status, the lack of estate planning has resulted in the generational loss of homes to the Probate court process. The Probate Court process is a legal statutory construct that does not accommodate for the unique family dynamics that exist in the Black American community in that it dictates who will inherit our assets, despite what we may desire or would have wanted. In addition, it is a cost that Black American families should not assume. It is estimated that Americans pay up to $2 billion a year in Probate and more than half of that amount is paid in attorney fees. This means that the Probate process is consuming generational wealth that should be given to our children, grandchildren and later generations through proper estate planning. According to the article 2021 Wills and Estate Planning Study, a Caring study found that “Overall, there are still only about a third of Black and Hispanics who have a will. However, that percentage has increased in 2020. The number of Black Americans with a will has increased by 6.2% (from 25.9% to 27.5%).” While many Black Americans experienced or witnessed the repercussions of not having an estate plan during this pandemic, the increase of Black Americans creating comprehensive estate plans to ensure effective generational transfer is slight.
The disparity in estate planning among Black Americans is contradictory to the statements made by Black Americans acknowledging the importance of estate planning. This leads one to ask why Black Americans are not actively participating in creating estate plans. Some of the most common reasons include the belief that they are too young to pursue estate planning, not wanting to think or discuss death, the belief that only having one child solves the issue, the cost of pursuing estate planning, belief that their estate is not valuable enough for an estate plan, belief that the process is burdensome and complicated, and the belief that they do not need one. The same study found “…Black Americans were less likely to cite procrastination as the reason they have not gotten a will – the number decreased by 27% since 2020. ‘I don’t have enough assets to leave to anyone’ is the second most common reason to neglect estate planning.”
Despite the reasons for inaction, the recent pandemic has been cited as the most common reason why Black Americans have pursued estate planning. Although the number of Black people participating in estate planning has grown since the pandemic, the percentage is still inordinately low. We cannot wait until an emergency arises to be motivated. The bottom line is that as we commemorate Juneteenth and Homeownership Awareness month, we also need to acknowledge the importance of protecting our achievements and passing on that legacy to our next generations, without depletions. Our ancestors fought for to achieve these accomplishments and to clear the path for us to achieve our accomplishments, let P.A. Lundy & Associates help you strategize to maintain your achievements and pass it on to your loved ones without a fight.
https://www.caring.com/caregivers/estate-planning/wills-survey/
