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White Americans are more than twice as likely as Black, brown, and Native Americans to get financial help from parents, according to a new poll that sheds light on the nation’s stark racial wealth gap.
Yet families of color can change that dynamic and improve the lives of their children and grandchildren by taking a few simple steps, says generational wealth planning attorney Portia Wood.
The Racial Wealth Gap and How to Close It
Thirty-eight percent of white adults say they’ve gotten at least $10,000 in gifts or loans from a parent or older relative, compared to 14% of Black adults, 16% for Latinos and 19% for Native Americans, the poll by NPR, the Robert Wood Johnson Foundation and the Harvard T.H. Chan School of Public Health finds.
More than a century of systemic racism, including in federal housing policies, has left the typical Black family with just 1/10th the wealth of the typical white one. Yet estate planning can help close the racial wealth gap, in part by bypassing the probate process that drains wealth from family estates not covered by comprehensive estate plans. In the U.S., families lose approximately $2 billion annually in the probate process.
“Every time a Black family settles an estate under the probate process, rather than under the terms of a living trust inside a professionally drafted estate plan, they give up wealth unnecessarily,” Portia says.
Comprehensive estate planning helps Black and brown families close the racial wealth gap by allowing them to:
- Keep control of their wealth, no matter what the future brings.
- Protect loved ones and pass more wealth to children and grandchildren.
- Open doors of opportunity to help future generations transform their lives by paying off debt, financing an education, starting a business, and making other meaningful investments.
“Estate planning is an extraordinarily powerful yet underutilized tool to help turn the tide on the wealth gap, and can protect your assets for the benefit of your loved ones,” Portia says.
Portia M. Wood, Esq., is a generational wealth planning attorney. Based in Los Angeles, she leads Wood Legal Group, LLP, an African American woman-owned and operated law firm specializing in estate planning, probate, and elder law that she runs with her mother and law partner, Robin Wood. They are passionately focused on helping all families grow and protect wealth by being a trusted resource for accurate information and comprehensive, culturally competent estate planning.