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Estate Tax Helps Fund The American Dream – Darius Ross

(newtownbee.com) A cynical few are saying the estate tax hurts African Americans in some disproportionate way. But they’re overlooking common-sense wealth planning. Here’s the deceptive reasoning behind their statement: it’s harder for African Americans to become millionaires (true), so the estate tax hits black entrepreneurs especially hard, forcing them to sell family businesses to pay the tax. Untrue.

The US Small Business Administration states that the main reasons family businesses fail are lack of business viability, lack of planning, little desire by the owner to transfer the firm, and reluctance of offspring to join the firm. Note that paying the estate tax isn’t one of them.

It’s great that there are more African American millionaires. I count myself fortunate to be among them. Between 1983 and 2001, the number of black households with net worth of a million or more dollars increased from 61,000 to 109,000. Many get their wealth from family businesses (funeral homes, medical practices, and real estate, construction, and service businesses).

If there are challenges in passing on the family business, let’s not kid ourselves that it’s somehow due to the estate tax. If anything, it’s due to a lack of legacy thinking and estate planning. There’s an “I’m gonna live forever” attitude that prevails among my wealthier African American friends (not all of them, but many). Patriarchs and matriarchs are not training heirs in business succession. (more…)

Ross could have stopped right when he says: “… lack of legacy thinking and estate planning”. No matter how many times we want to blame the legacy of slavery, racism, or “The System”, this is by far the central issue that must be addressed. Another point worth mentioning here is that financial planning must begin B-E-F-O-R-E one becomes wealthy. Let me give you a very simple example: A few years ago when my Mother-in-law passed, my wife, her brother and myself had the huge task of cleaning out the entire house. One of the things we kept finding were jars and jars of pocket change. Long story short, when my wife took these jars to the bank, it equated to AT LEAST $500 (I am sure it was much more than that). The point here is that their generation had a mindset that always told them to save up for a rainy day. This is exactly why I often challenge folks who are quick to blame “the system” as to why they find themselves living from paycheck to paycheck by asking them questions regarding their spending habits. The sad thing here is that if you preach this message (a message rooted in personal responsibility)  too many times (as if their is a limit), they you will be accused of “beating up on Black folks.”