New York City has one of the most diverse populations in the world, but there’s remarkably little diversity when it comes to property ownership. Discriminatory housing practices, lending policies, and inheritance laws have long helped older white Americans dominate wealth and real estate holdings. However, there may be another factor that’s much easier to tackle: a lack of estate planning among minority groups.
To encourage people of color to start the estate planning process sooner rather than later, our New York estate planning law firm addresses a few of the misconceptions of the process and how a robust estate plan prevents money lost in probate and taxes after your passing.
People of Color Need Estate Plans More Than Ever
Black Americans, women, LGBTQ individuals, and other minority communities have endured centuries of disenfranchisement. Even the right to inherit is relatively recent for minority groups, justifying a mistrust of legal protections often associated with the rich. Unfortunately, an unwillingness to invest in the same estate preservation or financial products that benefit the rich only makes it easier for minority owners to lose properties that have been in the family for generations.
Many different factors make it more difficult for black families in New York City to own property and pass on wealth, including:
- Home prices. A recent Center for NYC Neighborhoods study found that black-owned households have sharply declined in the city over the past 20 years. As in other cities, first-time homebuyers with moderate incomes are being pushed out of the real estate market by investors, “flippers,” or other buyers who can pay in cash. The problem is that black homebuyers pay higher closing costs and interest rates than white buyers, even when using Federal Housing Administration (FHA) mortgage loans. The racial wealth gap also means minority homebuyers have lower average down payments, meaning they pay more to the mortgage company over time.
- Gentrification. The influx of white businesses and residential developments has raised property prices and property taxes in formerly minority neighborhoods, causing housing instability, foreclosure, and displacement. Gentrification pushes the less affluent out, forcing them to seek affordable housing outside their communities.
- Predatory lending. Redlining, tax liens, predatory insurance rates, and other discriminatory lending practices occur disproportionately in black neighborhoods, allowing landlords and private investors to profit at the expense of minority homeowners.
- Maintenance and utility costs. Many buyers who secure a home are unprepared for the sudden and ongoing costs of homeownership, such as steep utility bills and expensive home repairs. An older home with a lower sale price is more likely to have problems that cost more in maintenance—a cost that is hard to estimate before purchase. Minority homeowners are more likely to be nickel-and-dimed by high heating bills or ruined by predatory home equity loans than white owners.
- Probate. Even if minority homebuyers can finance and pay off a home, there is no guarantee that it will successfully pass to the next generation. Without a plan to avoid probate, families could lose up to 10% of the value of a loved one’s estate just by going through probate proceedings. Families of color also suffer higher incidences of deed theft, property scams, and discrimination from brokers and real estate professionals.
Your Estate Plan Goes Beyond a Last Will and Testament
You don’t need to be a certain age or have a minimum amount in the bank to begin estate planning. Our experience drafting wills and trusts ensure that your property will be distributed according to your wishes with minimal opportunities for objection by family members or outside parties. We also designate powers of attorney and health care proxies to avoid disputes if you become incapacitated and can’t make decisions for yourself.
Landskind and Ricaforte Law Group, P.C. addresses your needs during the planning process, giving your heirs peace of mind and the inheritances they deserve. Contact us today through our online form to get started or read our free book, Estate and Medicaid Planning in New York: What Everyone Needs to Know.