'We are in a state of emergency.' More than 70% of Black Americans don't have a will. Here's why a plan is key

When actor Chadwick Boseman died in 2020, he didn’t have a will. Neither did recording artists Prince and Aretha Franklin.

Each time the news broke, there was surprise that such notable names hadn’t made estate plans. Yet, estate planning isn’t as common as experts argue it should be, particularly among Black Americans.

Overall, 33% of U.S. adults have a will, according to Caring.com’s 2021 wills and estate planning survey. Meanwhile, 27.5% of Black Americans have one, up from 25.9% in 2020.

The result is that Black Americans are missing out on the largest wealth transfer in history, said Brickson Diamond, co-founder of Black House Foundation, a non-profit organization aimed at creating new opportunities for the Black community in the film world.

Over the next 25 years, an estimated $68 trillion will be transferred from U.S. households to heirs and charity, according to an analysis of high-net-worth and ultra-high-net-worth markets by consulting group Cerulli Associates.

Without a plan in place, probate costs could be 3% to 8% of the value of an estate, said Diamond, a board member of Gentreo, an online estate-planning platform.

There is also a lack of clarity around a loved one’s wishes and potential discord that may cause among family members. Then, there is property that may have been in the family for a generation or more.

“So many families lose their family access and ownership of land,” he said.

“So if you haven’t prepared to pay the taxes and get the mortgage covered and the cost, the home will at best fall into disrepair and at worst fall out of the hands of the family.”

To be sure, Black Americans’ median wealth is less than 15% of that of white families, according to the Federal Reserve’s 2019 Survey of Consumer Finances. White families had a median wealth of $188,200, compared to $24,100 for Black families.

The median Black household wealth was forecast to hit zero by 2053 in a 2017 report by Prosperity Now and Institute for Policy Studies. Then, the pandemic hit, disproportionately impacting the Black community and accelerating that timeline, said Portia Wood, a Los Angeles-based estate attorney who focuses on Black, Latino and LGBTQ families.

“We are in a state of emergency now,” she said. “It is not a 2053 number anymore; it is here.”

Everyone over the age of 18 should make a plan, Wood said.

“The misconception that age is a factor, that you’re supposed to be old to do estate planning, or you’re supposed to be wealthy to do estate planning is just wrong,” she said.

She suggests finding a culturally competent attorney to help you, one that understands the specific issues Black Americans face.

There are also online resources, which may be able to help with basic situations.

Here’s a sampling of some documents you’ll need apart from a last will and testament:

• Durable power of attorney: This document lays out who can make financial decisions for you in the event you are incapacitated.
• Health-care power of attorney: This designates someone to handle your medical decisions if you become sick and can’t make them for yourself.
• Living will: Also called an advanced directive, a living will is a document that expresses your wishes for medical treatments you would or would not want to use to keep you alive, resuscitation and intubation.

A last will and testament spells out who you want to give your assets to after you die. It also allows you to name a guardian for any minor children you may have.

Just don’t think of it as one and done, Diamond said.

“It’s continuous,” he said. “[It] evolves as your assets evolve, evolves as your family evolves.”

Then there are trusts, which hold assets on behalf of your beneficiaries instead of those assets going directly to them. Diamond recommends them for those with higher asset levels and/or a complicated financial situation.

More from Invest in You:
How the Greenwood Project is removing barriers to careers in finance
Want a four-day-workweek job? Here’s how to land one
Student loan holders are more likely to be women and people of color

Wood believes trusts are a better method than wills to build generational wealth because she said they protect your assets.

“For most people, a will is not enough,” she said. “Your trust creates a trust for the people you left behind, the beneficiaries, with instructions.”

No matter the route you chose, it’s important to take a step towards creating a plan, which can help create generational wealth, she said.

“You can’t afford not to,” Wood said. “The economic cost is just too great to do nothing.”

SIGN UP: Money 101 is an 8-week learning course to financial freedom, delivered weekly to your inbox. For the Spanish version Dinero 101, click here.

CHECK OUT: Florida is the best place to retire in the U.S., but 2 states are close runners up, analysis finds with Acorns+CNBC

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.