To Prevent Racial Wealth and Homeownership Gaps from Widening, Break Down Barriers to Estate Planning

Homeownership is one of the most effective ways to build wealth and financial stability. Homeowners benefit from stable monthly payments, tax deductions, and increasing equity.

But Black and Hispanic households face unique barriers to achieving homeownership, sustaining it, and reaping its benefits, in part because of more than a century of discrimination and exclusion. These long-standing racial disparities in homeownership have contributed to the overall racial wealth gap: today, the typical Black family has just 15 percent of the wealth the typical white family holds, and the typical Hispanic family has just 20 percent. (We’ve used the term “Hispanic” throughout this post, but we recognize that not every member of this group may identify with this term.)

One factor that’s fueling the trend is barriers to wealth transfers, such as inheritances, across generations. Policymakers have focused on reducing barriers in access to homeownership for people of color, with mixed success, but even when households of color can achieve homeownership, key hurdles limit their ability to pass it on to their heirs.

In a new analysis, we find Black and Hispanic homeowners are less likely than white homeowners to have wills or estate plans. And because most of the typical Black or Hispanic homeowner’s wealth is tied up in their home, they likely don’t have the necessary liquid assets to pay for estate planning. This puts them at risk of having a “tangled property title,” which does not accurately reflect who owns the home and constricts the flow of housing wealth from one generation to the next. Without intervention, this situation could lead to further widening of the racial wealth gap.

Black and Hispanic homeowners are the least likely to have wills and trusts

According to the latest data, 42.4 percent of all real estate owners older than 50 do not have a will or trust. But there is a massive racial disparity in will making. Thirty-five percent of older white homeowners with children do not have a will or trust, compared with 76 percent of Hispanic homeowners and nearly 70 percent of Black homeowners.