Preparation for life after death, though daunting, is essential.
This can take root in several forms, including a will or trust. A thorough understanding of the differences between the two is paramount to making the right decision for the beneficiaries who will seize control of the mentioned assets.
Unfortunately, among Black families, these estate planning options aren’t always discussed. Consumer Reports says 61% of white families and 67% of English-speaking Asians don’t have a will. In contrast, 77% of Black people and 82% of Hispanic people do not have a will, according to their statistics.
According to a report from Cerulli, by 2045 up to $84.4 trillion will be transferred from households to heirs or donated to charities.
This means a significant source of generational wealth is being missed by Black families.
“We have been conditioned towe’re Tessa Edison, the founder of ASSET Management Consulting who holds over two decades of experience in the real estate industry, told AfroTech in an exclusive interview. “If we don’t want to have those conversations, protect ourselves. So, I think that’s part of the issue in our community, but I think that by to happen more, it free us.”
Celebrities Who Passed Without A Will
The issue of estate planning is not merely overlooked by average households. We have seen this with celebrities who have generated millions.
As AfroTech previously highlighted, Prince died without a will, and he left behind an estate valued at $156.4 million, according to Billboard.
A six-year legal battle ensued and led to a verdict from the First Judicial District of Minnesota to split the estate evenly between Prince Legacy LLC and Prince Oat Holdings LLC.
Other celebrities who have had their estates disputed in court include Aretha Franklin, James Brown, and Chadwick Boseman. The “Black Panther” star lost over a third of his estate due to legal fees and the government, according to Hands Law Firm. What’s more, the firm also noted Boseman’s family could have been left with nothing if they weren’t protected by California’s intestacy laws, which give the probate court the authority to choose who receives their loved one’s assets.
It was decided that the value of Boseman’s estate, after considering legal fees, would be $2.3 million. The money was divided evenly between his wife, Taylor Simone Ledward, and his parents, Leroy and Carolyn Boseman, per Monroe County Lawyers.
Without legal proof of how one’s estate should be split, the result could be a lengthy court case. This would come with filing and attorney fees, which would likely be paid by the estate.
The creation of a trust can speed up the court’s decision, ultimately saving your estate and heirs more money. In addition, a trust also makes a compelling case for generational wealth building and protecting your assets.
Edison argues that creating a trust has more legal protections than writing a will alone.
“A will to me is like a wishlist,” Edison said. “A trust is a document that could be held up in court so nobody has to figure it out for you. It protects the wealth you generated to pass on.”
She added, “A trust is solid because they wrote it when they were alive. They did it with an attorney, it can hold up.So, as a personal representative, I can say, ‘I the will,’ but there’s me to the will. A trust, you’re forced to follow it because it to things.
There are two options to consider: revocable or irrevocable trust.
By definition, a revocable trust allows a person to maintain control over their assets during their lifetime, according to Burner Law. It can also be modified unless the person this route means your family members will avoid the probate process, and your assets will continue to be managed “without interruption,” per Trust & Will. On the other hand, there is no tax advantage or asset protection, and you will need to regularly update the trust.
“I want everything that I worked hard for to pass on to my only child, and theway to do that is through a living trust, a revocable trust so that you can it as you Edison explained. “The first step deep and figuring out what really were my assets. These are up. of those assets have liability attached to them as well. So you have to add those up. What are the liabilities? if I pass along? Whatever needs to be paid so that these things can be kept and passed on to my son.”
On the other hand, an irrevocable trust has its own lists of pros and cons, according to Trust & Will. This type of trust cannot be modified or amended once signed. The benefits of this route includeand assets listed will not add to the estate’s value. In addition, they can be protected from creditors and legal opponents.
You should ultimately sit down with an estate attorney to determine what is the most suitable route for your circumstances.
Notes for estate planning: Consider $150–$600 for a simple will and $1,500–$3,000 for advanced documents such as trusts and power of attorneys, per Contracts Counsel.
“Getting an estate attorney is a couple thousand dollars, and people are afraid to do that because it’s expensive, but death costs even more than that,” Edison told AfroTech. “I don’thow much it costs to bury people. That could easily be $20,000. So, to me it’s worth the investment.”
Know Your Net Worth
Furthermore, it is important to be aware of your net worth. CNN Money states an individual with a net worth of at least $100,000, and “a substantial amount of assets in real estate,” should look to establish a trust.
Disclaimer: This statistic should not discourage those with a net worth of under six figures from looking into a trust.
“As a community, that’s the firstneed to do is out what our net worth is,” Edison . “That way you So, the conversation away from mourning death and loss, and planning, protection, generational wealth. It turns the tables on that dinner conversation.”