Why Estate Planning Is The Secret To Building Generational Wealth In Our Community

The wealth gap is one of the biggest challenges of our generation. This might change that.


For Blacks in America, even more important than creating wealth is passing that wealth down to the next generation. According to a study by Prosperity Now and the Institute For Policy Studies, the estimated median wealth for Blacks in America will fall to $0 by 2053. Researchers concluded, "As long as a substantial racial wealth gap persists, White households will continue to enjoy greater advantages than their Black and Latino neighbors in meeting the financial challenges of everyday life and will be able to make greater investments in their children, passing economic advantages on."

Confronting the wealth gap and the associated public policies that help fuel it will be one of the biggest challenges of our current generation.

Lawyer Art Steele is trying to change this narrative. As the host of the InkSecure Podcast, she educates entrepreneurs about the legal aspects of their business and how to use the law to grow their business. As a Trusts and Estates attorney, she's also a fierce estate planning advocate with a mission to educate as many minorities about the necessity of proper long-term estate planning. "It's not sexy [and] so easy for people to ignore. When it becomes relevant, it's way too late," says Art. "Personal behavior does not close the wealth gap. We can make as much money as we want. We can be our own bosses. We can build these million-dollar entrepreneurial businesses as much as we want. Yes, it's important that we create wealth, but we need to pass it down and pass it down the correct way. If we don't, every single generation is starting from scratch," states Art.

Avoiding the financial vacuums that are created when someone dies and providing financial gifts for the future, is the key to building wealth in our communities. xoNecole spoke to Art about the benefits of estate planning and some of the key things to keep in mind when beginning the estate planning process.

1. The ability to pass down wealth efficiently.

Black multi-generation family counting coins

Getty Images

Instead of leaving it up to the probate process, estate planning allows you to set up how your wealth is passed down and in a cost-effective and timely manner. Oftentimes, death is unexpected and can leave families with immediate financial obligations. If one's estate is not properly set up, getting access to funds can be a long, drawn-out and costly process. "When you create an estate plan and keep your estate out of probate, you save money. More money goes to your heirs," recommends Art.

While having a will can be useful, setting up a trust is the next step in ensuring what you leave behind gets disposed of in a timely manner. "If you only have a will and not a trust, your entire estate goes through the probate (legal process)," warns Art. To expedite the process, "you should create a will (to be filed in court), but dispose of all your property through a trust. This method avoids probate because the trust agreement is a private contract between you and the trustee (someone you've named). You can get as detailed as possible," explains Art. The value of setting up a trust is the trustee's ability to start working immediately to take care of your family, carry out your wishes and dispose of your assets without having to wait on the court system.

In order to truly build generational wealth, Art recommends thinking beyond lump-sum payouts, where money and assets can be squandered quickly. "When creating an estate plan, think about two to three generations down the line. For example, you may give your children access to a trust fund for life (in the form of monetary distributions) and when they die, the trust funds pass on to the next generation." Though trusts cannot be passed on for an eternity, ensuring there is something left to give to the next generation is more powerful than not having anything passed down at all.

Another key thing to keep in mind is investing in life insurance--especially if you don't have physical assets or money to leave behind. It's important to list beneficiaries even if you don't have a dependent, and it is usually cheaper the younger you are. "Life insurance helps keep things at status quo. No one has to pay for your funeral. You can leave money behind to a niece, brother, or partner, etc." says Art.

2. The ability to have your affairs handled more cost-effectively. 

Estate planning also involves creating a plan and designating someone to handle your affairs in the event you become incapacitated, which is done in the form of a power of attorney. "This immediately gives someone access to all of your financials and ability to take money out of your bank account. Your Power of Attorney (POA) can also sign contracts, real estate documents, enter into business contracts, or talk to the IRS on your behalf," explains Art. Your POA can legally tend to immediate financial concerns such as paying your rent, mortgage, or child care should you become incompacitated or die.

If you don't have a power of attorney, loved ones will have to "hire a lawyer, go to court, get a bond and have the court appoint [someone] as the custodian or conservator of your money," warns Art. The process is very expensive and usually prohibitive for most families because it requires hiring a lawyer on an emergency basis because of the urgent needs. Investing in hiring a lawyer to draft a state-recognized Power of Attorney document is worthwhile. Many banks and some states have their own power of attorney documents available for free.

Having an advanced medical directive is also extremely important and allows individuals to designate someone to make medical decisions on their behalf in case they become incapacitated. Advanced medical directives should "have instructions on what should be done to your body, access to medical records, and contain a HIPPA release," says Art. Oftentimes important medical decisions need to be made in traumatic circumstances. Taking the time to think about who you entrust to make important medical decisions on your behalf could be a life or death matter. Why leave it up to chance?

3. The ability to make your final wishes clear.

Getty Images

Estate planning protects against speculation and disputes concerning the unknown that can usually follow death or incapacitation. It allows you to avoid confusion and answer questions in advance for heirs such as "How, when, and where will my property and assets be disposed? Who will take care of my children?"

Take celebrities Nipsey Hussle and Prince as examples - both prolific musicians who died without a will at different stages of their career. Nipsey's $2 million estate is currently being petitioned to be administered by his older brother Samiel Asghedom. Three years after Prince's death, his estate, valued between $200-300 million, is still unsettled.

Estate planning is also critical for business owners. "If you have a business that has inventory, what happens to that? Who gets it? Does the business continue on [if you die]? Who has the authority to continue on? Can they sell the business? Who do you want to manage the business?" An estate attorney will work with you to legally set up the answers to these questions to ensure your business doesn't die as well.

4. The ability to protect who manages your intellectual property.

Being that we live in a digital world, we all have some form of intellectual property, which Art describes as "property that can produce income long after you're gone." Who is going to manage that income? Where does that income go? Who manages the property so that it actually continues to produce income? Art recognizes, "A lot of entrepreneurs are developing intellectual property through e-books, online courses, blogs. What happens to your creations?" For instance, for musicians especially, leaving behind clear instructions on how one's masters, image and likeness and trademarks can be used is important for protecting one's artistic legacy.

Towards the end of our chat, Art confesses that estate planning can often be a "tough thing to spend money on" because the person setting up their estate plan doesn't receive an immediate benefit. However, "it's the only step we can take to close the generational wealth gap," she urges readers. "Even if you do not have children, you should leave something behind. We should look at estate planning as a way to create wealth for our community."

No one wants to think about their ultimate demise, but making sure the next generation of Blacks in America are set up for success by our ability to pass wealth down is one the most urgent duties of our time. Stop waiting. Start now.

To learn more about getting started on planning your estate and get a FREE copy of Art's estate planning worksheets, click here.

Be sure to follow Art on Instagram @artsteele_esq for more estate planning tips.

Want more stories like this? Sign up for our newsletter here to receive our latest articles and news straight to your inbox.

Featured image by Getty Images

Something that I try to mention, as much as possible, especially when it comes to married and long-term couples is, if you want to go the distance, it's not just the "big things" that you've got to stay up on; it's the little things too. Something as simple as you being a morning person while your partner is a night owl can affect everything from quality of sleep to quality time to your sex life. That's why, when it comes to couples who have different sleep patterns who still want to have a fulfilling sexual dynamic, I'm all about encouraging them to do what is at the foundation for all successful relationships — compromise. Sometimes that means that an alarm clock needs to be set or someone needs to initiate some, umm, stuff (more on that in a bit) in order to get the juices flowing (pun intended and not intended).

Keep reading... Show less
The daily empowerment fix you need.
Make things inbox official.

Victoria Monét has worked behind the scenes as a songwriter penning hits for Ariana Grande, Chloe x Halle, Brandy, and more, and now it's time for her to stand in the spotlight. The "Coastin'" singer has dropped multiple projects over the last few years to showcase her vocal talent and so far she has been receiving praise for her sultry and jazzy sound. Her most recent project, the 2020 EP Jaguar stayed in the mode of jazz while also infusing sounds that are reminiscent of the '70s.

Keep reading... Show less

It's always good when you can learn something and laugh at the same time, and these Black women on TikTok make sure you're doing both week after week. From teaching us how to best navigate the job search to giving tips specific to advancement in certain industries, these videos are all about empowering and inspiring you to advance in your career. Check out a few of the top TikTok users for this week's picks to enjoy during your lunch break and allow to live rent-free in your head:

Keep reading... Show less

After previously saying that she was in the process of adopting children, Tiffany Haddish is putting motherhood on "pause." The beloved comedian grew up in the foster care system and originally wanted to be a foster mom, but with advice from her lawyers, she decided that adoption would be best. However, it looks like we won't see her with a child anytime soon.

Keep reading... Show less

It was actually pretty close to this time last year when I penned the piece "How To Get Through The Holidays If You Don't Observe Them". Unlike some of the other articles that I write for the site, I pulled that one from very personal experience. Being that my personality is very wired to "be good" on something once I know its origin, holidays are something that I tend to take a pass on; this includes Thanksgiving (some insightful reads on its origin are found here, here and here). Still, this doesn't mean I'm not aware of the fact that many people use this time of year to reflect on their blessings and to say "thanks" for all the good that has come their way. Since I like to write on relationships a lot, I thought to myself, "Why not come up with ways for people to show gratitude to their significant other?"

Keep reading... Show less
Exclusive Interviews

'David Makes Man' Star Arlen Escarpeta Believes Love And Accountability Go Hand In Hand

"While we are quick to judge others, we really have to look at ourselves and call out some of the things that we do."

Latest Posts