47.8 F
Baltimore
Sunday, January 23, 2022

Estate Planning: Not Just a Tool for the Rich

Question: I want to leave my house to my children when I pass, but I don’t really own any other valuables besides my house.  Do I still need to do estate planning?”

Answer: There is a prevalent notion that only those with substantial assets need to do estate planning. The word “estate” often elicits images of grand mansions seated atop sprawling plots of land owed and stewarded by the ultra-rich. Interestingly, the egregious nature of this image is often, obscured in lobbying efforts, by those who attempt to repeal the estate tax. The term “death tax” is often used to distract from the image of taxing wealthy individuals— a universally popular position— by referring instead to taking money from someone who has recently passed away. 

The word estate in working-class circles is quite different. For those without an army of financial advisors watching over their fortunes, it is the family home, cared for and maintained throughout the generations, that is often the greatest, if not the only, asset. When asked about preparing an estate plan, it may be natural for homeowners to respond with a puzzled look, as they wonder what valuables they might pass on besides the home. But estate planning is not only used to ensure safe asset transfer, it is also important for helping families maintain their assets while they are living. 

The wealthy may complain about the tax man coming after the spoils of their hard-earned, job-creating labor, but it is the working poor whose estates are under the greatest threat. In these neighborhoods, the bedrock of wealth creation has been eroded by structurally racist housing policies, making it all but impossible to keep up with the gains of the rich. In this context, estate planning may be seen as one part of a multi-layered strategy designed to protect homeowners from this continued inequity. 

If residents in neighborhoods are going to have a chance of protecting themselves from the ever-evolving landscape of predatory housing practices, they must ensure their homes are properly titled in their names, giving them “legal” ownership of the home. In addition, they must carefully plan so that their heirs are in the same position after their passing. Without this legal designation of ownership, families and their estates are far more vulnerable to catastrophe. With clear title, homeowners can access several financial credits including the Homeowners and Homestead Property Tax Credits, water credits and/or home repair programs, all designed to help prevent the loss of the family home. 

Rising home prices and runaway development may mean higher property taxes for families already facing the demanding situation of having their homes over assessed and under appraised. The tax credits give them a fighting chance as they struggle to avoid displacement. 

High water bills and environmental citations are notorious in low-income neighborhoods as many blocks are littered with homes where a lien amount is higher than the value of the now-vacant house. For the remaining homeowners, blight and disrepair drive down home prices, making it impossible to borrow against the house to do home-repairs. 

But there’s the rub: all these available programs require that the homeowner’s name be listed on the deed to the property. Many family homes for low-income Baltimoreans have been passed down for multiple generations, without an estate being opened or new deed recorded. Without estate planning, the deed of the house remains in the name of the initial family member that may have passed 10-20 years ago or more. The estate becomes more complex and more difficult to unravel as each generation— with their own legal interest in the home— transitions through the property. 

Working class families may not have an enormous amount of assets, but they must do their estate planning. Even with proper planning, no outcome is guaranteed. The wealth-extraction schemes show no signs of slowing.  It is imperative for families to consider tools like wills; life estate deeds; financial, powers of attorney; and advance medical directives.

John Kern is the Advanced Planning Project Coordinator at Maryland Volunteer Lawyers Service (www.mvlslaw.org) where he conducts outreach on estate planning, financial stabilization and preserving wealth, particularly in communities of color.

Do you have a question you would like to see addressed in this column? Email [email protected] to submit your question to the Baltimore Times’ legal tip column.

+ posts

Related Articles

Get in Touch

4,900FansLike
3,800FollowersFollow
4,500SubscribersSubscribe

Latest Posts