I’m glad the podcast episode inspired you to take action. You’re here because you’re ready to take real action steps to protect your family and build your legacy. (I’ve prepared a simple handbook to get you started or stay with me and it’ll help you get started).
Every single one of us has the power to change our future for generations to come and Blacks in 2018 have the capacity to pass on wealth more than any previous generation. And proper estate planning is the only way to pass down wealth from one generation to another.
What’s at stake?
Between 60 – 70% of Blacks have no will or estate plan in place. That’s a staggering number! When you die without a will or no estate plan in place, your assets are subject to probate. It is estimated that families pay $2 billion each year in probate fees, $1.5 billion of that in attorneys fees!
Lack of estate planning is not only preventing us from transferring wealth, it’s costing us money. I’ve seen entire estates wiped out because of probate and attorney fees and many more that never get administered because the families can’t afford the process and the intended beneficiaries never have access to it.
So what does this all mean? All of the real estate, businesses, investment portfolios, retirement accounts mean nothing if we don’t pass it down, and do so efficiently. And while having a will is a great start, it’s not always the most tax efficient way to pass wealth down. Thus, you should take time to sit down with an estate planning attorney to develop an estate plan that works for you and your family.
Legacy Building Mindset
I know at least a few of you are already thinking, “I’m single, this is not for me.” Or, “I’m only 18, this is not for me.” The two most common misconception about estate planning is that (1) I don’t have anything to pass down or anyone to pass it down to and (2) estate planning is only for rich people “nobody will fight over what I have.”Estate planning is not only for rich people, it's for PEOPLE people! Click To Tweet
First of all, I’ve seen families torn apart over $20,000. People will fight over anything and everything.
Second, how many of you are entrepreneurs? How many of you had to keep that full-time job to finance your side hustle? Imagine if you received a $20,000 gift from a relative? How would that have helped you monetize your business more quickly?
And for the single people, do you have any nieces or nephews, or cousins or aunts or uncles or friends? So you do have someone to leave “something” to.
For the 18-year-old, you’re probably a college student, you may want to start a business. Are you the first in your family to go to college? How is your college education earning potential going to affect your family while you’re alive? Now imagine what happens to your family if they never realize that earning potential because your life was cut short? Having a life insurance policy is a way of replacing that income and giving your family financial access to what you would have earned.
We need a mindset shift. For too long we’ve been told, go to school, go to college, get a good job, find a great life partner, and our children will be better off. Yes, the next generation will be better educated, there will be fewer barriers to entering the workforce or launching a start-up, they will earn more money, but that’s not enough.
As I mentioned in episode 44, earning money but not passing it down forces each generation to start from scratch. And, we further increase the wealth gap by ignoring effective estate planning while Whites take advantage of it and have been for years.
Proper estate planning means we can reduce our dependence on student loans, we can live in a house (free of title issues) rent-free, it means not having to start a business from scratch, and providing resources to our community and institutions that further our progress.
What is Estate Planning?
Building a legacy building (we’re talking pass wealth down to the next generation) is more than leaving a life insurance policy. It also involves putting mechanisms in place to make sure that money (even as little as $10,000 or $50,000) can have a meaningful impact for generations to come. That involves planning for incapacity, planning for tax efficiency, and prolonged planning through trusts.
Thus, estate planning encompasses a wide range of planning decisions. A proper estate plan should include the following topics:
- Planning for incapacity – many of us only think about what happens to our assets when we die. But what happens if you’re incapacitated? Who do you want to make medical decisions on your behalf? Who do you want to have access to your bank accounts, social media accounts?
- Asset organization – Most of us keep our financial information private. Having a list of all of your assets and how to access them makes it easier for your family or appointees to properly manage your assets.
- Disposition of your assets – if you die intestate (without a will), not only does probate costs eat up your assets, but the state in which you live decides who gets your estate and how much.
- Wealth planning for future generations – Using trusts to dispose of your estate gives you more flexibility in how and when your children or beneficiaries receive assets from your estate (long after you’re gone).
I’ve created a simple workbook for you to get started. This workbook includes:
- Questionnaire – all good estate plans start with a questionnaire about you and your family background.
- Asset Planning Worksheet – get it all in one place
- Fiduciaries – these are the people who administer your estate after you’re gone. This includes executors, trustee, guardians for your minor children, power of attorney for finances and health care decisions.
- Estate planning checklist – do you need a will? Or a will and a trust? It depends! This checklist gives you some things to consider.
This is the first solid step to learning more about creating an estate plan.