2023-11-18 06:15:46
Comment on this storyCommentAdd to your saved storiesSave
My husband and I are updating our estate plan.
Our oldest daughter, now 28, will take care of our affairs in the event we become incapacitated and unable to manage our finances, and after we pass away.
Our will specifies how our assets will be distributed and stipulates what type of medical care we want if we cannot speak for ourselves. We also have a living will that addresses whether we want life-prolonging procedures.
Our goal is to avoid leaving a mess when we are away. Too many people do not plan for their death. Only 46 percent of American adults have a will, according to a Gallup Poll 2021. The remaining 54 percent are at the mercy of their states to dictate how their assets will be distributed.
Americans 65 and older are the most likely to have a will, and just over three-quarters say they have one, Gallup found.
But having an estate plan is not enough. He must speak with his heirs about his wishes and the reasons behind them. You may also need to reconsider directives based on those conversations.
Among the things we discussed with our daughter was our desire to be cremated. We want to set aside funds to help family members who may need financial assistance and contribute to a college fund for a niece and nephew.
Then the conversation turned to our two-story colonial house, which we paid for before my husband retired this year. Hallelujah!
Prepaying our mortgage sparked a debate. But it was the right thing for us.
Getting rid of that debt fulfilled an old desire to keep the house in the family, without a mortgage.
In this house we have welcomed relatives who needed a place to recover financially. It is the central location for our family gatherings during the holidays, birthdays and college graduations.
We imagine that at least one of our children, all in their 20s, would move into the house once we’re gone. Selling it was not part of our estate plan.
“Mom, I’m selling the house,” Olivia uttered.
“Um, our house, our choice,” I responded.
I explained to him again, because we’ve talked about this many times, that black people should keep their homes. We are a people who have suffered greatly from systemic racism that made it extremely difficult to become homeowners.
In 1940, the homeownership rate for blacks was 22.8 percent, nearly half the 45.6 percent for whites, according to the National Community Reinvestment Coalition.
Until 1968, homeowners and real estate agents could legally refuse to sell homes to African Americans and other people of color. Financial institutions, backed by federal policy, created sections of cities in a racially motivated system called redlining. Allowed banks to deny mortgage loans based on a homebuyer’s race. The Fair Housing Act of 1968 made these practices illegal.
Two years later, the homeownership rate for blacks was 41.6 percent. Among white households, it was 68 percent.
How inheritance data secretly explains inequality in America
More than five decades later, homeownership rates among blacks have barely budged. In 2022, about 46 percent of Black families owned their home, according to the report recently released by the Federal Reserve. Consumer Finance Survey. That compares to 73 percent of white families.
I began to cry as I reminded Olivia of what I wrote in my “Sincerely, Michelle” series about race, which is that most Americans’ net worth boils down to their home equity. It is this equity that has created generational wealth.
My grandmother, the great-granddaughter of enslaved people, scrimped and saved to be mortgage-free before she retired. She instilled in me that, to the best of your ability, you should support your family at home.
No, ma’am, you won’t sell our house, I told my daughter after my history lesson.
“Mom, I hear you and I understand your passion for maintaining the house,” he began. She is a trained social worker and therapist, so her tone was reassuring and respectful.
He then presented an argument for selling our house that I had not considered.
“If you leave the house to just one of us, those who don’t get a house paid for might feel some kind of way,” he said. “Besides, this house is too big for us. Wouldn’t it make more sense to take the money and invest in the homes we want?
Olivia explained, after talking to her siblings, that they also want to be mortgage-free before they retire. With no mortgage or a smaller mortgage loan, it would free up money that they could then apply to their retirement accounts or save to send their kids to college debt-free, like we had done for them.
I didn’t go to the school of my dreams. I now live debt free.
“Wouldn’t that contribute to wealth creation in our family?” Olivia stated.
I have counseled families who stubbornly held on to homes no one wanted, only to let them deteriorate because they lacked the funds to maintain the property. Protracted legal battles can arise when one heir wants to keep the house but can’t afford to buy out others.
Of the 6 percent of Americans who own homes or other property they inherited, about half do not use them as their primary residence, according to a Washington Post analysis of Federal Reserve data. About 4 percent of black Americans live in an inherited home, compared to about 3 percent of whites.
But what’s the point of keeping a house that’s unused or doesn’t provide positive cash flow just because your mom, dad, or grandparents made you swear you’d never sell?
We are changing the will. They can sell the house.
Then I raised the issue of our ashes. “Would you put it on a shelf in your house?”
“Mom, no, we don’t want your ashes,” Olivia said.
More and more people are cremated, but what happens to the ashes?
“What if you put some ashes in a locket or turned them into a diamond?” I offered as a compromise.
“Yuck, no,” he said. “I will carry your memory in my heart and scatter your ashes in the ocean because you like the beach.”
So our children don’t want our home or our ashes, and that’s okay. It’s not just about what we want. It is also the best for them.
BOM — The Best of Michelle Singletary on Personal Finance
If you have a personal finance question for Washington Post columnist Michelle Singletary, call 1-855-ASK-POST (1-855-275-7678).
My mortgage payment story: My husband and I paid off our house in the spring of 2023 by making extra payments and taking advantage of a mortgage recast. Although it lowered my perfect credit score from 850 and my column about it sparked serious debate with readers, it was one of the best financial decisions I’ve ever made.
Credit card debt: If you are in the habit of carrying credit card debt, stop doing it. It is just a myth that will increase your credit score. For those looking to get out of credit card debt, see if a balance transfer is right for you.
Money moves for life: For a broader overview of my timeless money tips, check out Michelle Singletary’s Money Milestones. The interactive package offers guidance for every stage of life, whether you’re just starting your career or planning for retirement.
Test yourself: Do you know what your financial situation is? Take our quiz and read more personal finance tips.
#children #house #paid #ashes