Brick by Brick: Building Generational Wealth for Black Americans

Why Black Americans Need a Will 

What do Prince, Jimi Hendrix, Bob Marley, James Brown, and Barry White have in common? Besides being some of the biggest iconic, black musicians of all time, they all died without a will. In fact, 70% of Black Americans do not have a will. Unfortunately, when we find out there isn’t a will, it’s usually too late. 

I’ve been helping clients achieve their financial goals since 2012, and I still feel there is a general hush-hush in regard to speaking about money. In my anecdotal point of view, this urge to keep quiet about financial moves is notably stronger in black and brown communities.

Why is Estate Planning Important? 

Estate planning is often considered to be something that only the super-rich need to worry about… being it usually involves big inheritances and multi-million-dollar homes. That’s completely untrue. Estate planning covers many more aspects than trusts alone and is one of the most important parts of financial planning. 

When it comes to deciding what happens with your assets and liabilities when you pass away, understanding your options is invaluable. 

Unfortunately, black and brown communities are unaware of the access they have to build their own estate plan. Often leading to them passing away without one in place. Once we have an understanding of the importance of it, we can take action for ourselves and our loved ones. Here is a walkthrough covering the basics of estate planning and how it applies to you. 

Living Will, Last Will, and Power of Attorney

The word “will” is very broad. Considering there are many different types of documents that can be established to indicate your wishes when incapacitated or no longer living. We’ll cover the main ones:

Living Will: A living will communicates your preferences when it comes to medical treatment, while you are still alive. One of the values of this document is that it also states your stance on life-sustaining treatments if one day you’re no longer able to speak for yourself. 

Last Will: A last will sets specific instructions for the distribution of your estate in the case of your death. The value of this is that you are removing the emotional stress of your family, and can decide for yourself who gets what. 

Power of Attorney: A medical or healthcare POA will designate someone to make decisions on your behalf if one day you’re unable to do so. This is often an extension of when a living will won’t cover all possible scenarios. 

Types of Trusts 

What is a trust? A legal agreement between an asset owner and a third party. The agreement gives fiduciary control of an asset or an estate to a trustee, who then manages it on behalf of the owner for the beneficiaries.

There are two common types of trusts: revocable, and irrevocable, and the names are pretty self-explanatory. 

With a revocable trust, you can change or cancel the terms of it, including the beneficiaries. In this scenario,  upon death, the assets on the trust don’t go through a last will, they go through the terms of the trust. With an irrevocable trust you can’t change the terms. How is this beneficial? The assets in the trust are not included in your gross estate for estate tax purposes. These assets are also out of reach to creditors.

Will Substitutes

There are many reasons why some clients don’t want their assets to go through a last will. This is often because of legal fees and long timelines. If this is the case for you, there are alternatives. 

Beneficiary Forms: this form includes the name of your primary and secondary beneficiaries, overriding the last will. 

TOD and POD: These acronyms stand for Transfer on Death and Payable on Death. Similar to beneficiary forms, upon death, your assets go to the individuals listed. 

Right of Survivorship: Transfer assets directly to the surviving tenant at the death of the other. This can only be used with legally married couples and is not recognized in all states. 

Lack of Diversity and Representation of Black Americans in Wealth Management

I would be remiss if I didn’t take a moment to address the disparities in access to education, resources, financial products, and the like in the finance industry. To pile on to the long history of Wall Street’s lack of interest in bringing financial competence to our country’s marginalized populations. The financial planning space suffers from a gross lack of diversity and representation. Out of 300,000 personal Financial Advisors, 92,000 are Certified Financial Planners®. Out of that population, only about 1600 (1.8%) are Black or African American. That means only about 0.52% of Financial Advisors are black and have their CFP® credentials.

That’s correct, this blog that you’re reading was written by a real-life unicorn.

So therein lies the problem. Even when people of color seek out financial advice, there aren’t many options when it comes to finding qualified planners that they can relate to and understand from a cultural perspective.

One of the biggest reasons I pursued a career in financial planning was because no advisors were knocking down the doors of people that looked like me to help them navigate their finances. As my career grew, I looked around and saw very few diverse planners. Additionally, I saw even fewer planners willing to work with “unqualified” prospects. But that’s the culture you get at the big Wall Street firms; the practice of assessing whether someone is worth your time because they meet a minimum asset level. 

When I started my firm, I wanted to be different. One of our biggest priorities was to ensure anyone that wanted help from our group, would get it. Whether you have millions or are just starting to save up your emergency fund.

I Became a Financial Planner to Help People Who Look Like Me

In conclusion, there are many reasons why I am a financial planner today. But the main reason is that I want to maximize the available help for people that look like me. I understand the financial difficulties that black and brown communities face every day, and most importantly, I understand how hard it is to talk to someone about it. 

I want to educate and spread awareness on the importance of financial planning, making sure your legacy ends up in the right hands. Above all, I want to be a resource to black americans that want to make the right decisions and don’t understand how to do it. 

You don’t want it to be too late to plan for your legacy and the future of your loved ones, you deserve better. 

Disclosure: This blog is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.