Frances Lewis sees herself as a survivor. She grew up in a poor, but close-knit family in Detroit, and married when she was age 21. “During our first year of marriage, my husband and I only had $27 between us,” recalls Lewis, an “emancipated housewife” who went back to school in her late 20s. Her five sons were ages 5, 6, 7, 8, and 9 when she received her Bachelor’s degree in elementary education from Wayne State University.
Today, the 64-year-old grandmother and soon-to-be retired educator is crafting an estate plan in order to make sure her loved ones are taken care of in the event of her death. Lewis’ impressive estate, comprises life insurance policies, retirement funds, several rental properties, and a Coverall cleaning franchise-Williams Lewis Connections Inc.
Lewis started saving shortly after entering the workforce in the early 70s. As soon as she was eligible, she began participating in a 403(b)-retirement savings plan (designed for civil service employees). She started with just $10 out of every paycheck.
“I still remember the exact [amount] I was making-$7,716 a year,” she jokes. She gradually increased her contributions so that by the time she retires in February 2001, she will be saving over 30% of her bi-weekly salary. Over the years, Lewis also invested roughly $100,000 in real estate, then built, purchased and later rented out property that once belonged to family members (and willed to other relatives).
Lewis says that she and her late husband, Thomas Sr., a retired janitor with Chrysler Corp., had wills. However, it wasn’t until five years ago, after her husband’s death, that she began to work seriously with a financial advisor.
She set up a custodial account for two of her grandchildren, Monique, 13, and Thomas Jr., 10, to help provide for their college education and other living expenses. She also has created and transferred the bulk of her assets into a living revocable trust, which she is transferring to First of Michigan, a division of Fahnestock soon.
Lewis understands that one of the most important reasons for estate planning is addressed in principle No. 10 of the Declaration of Financial Empowerment (DOFE), which is to ensure that your wealth is passed on to the next generation. For too long, this has not been a tradition among African American families, but that’s now changing with more people like Lewis practicing generational wealth-building.
Transferring wealth means more than just building it through equity investments or building the value of a business. You must engage in solid tax planning for your heirs. Without careful planning, your rock-solid estate could shatter, leaving your heirs with a mere fraction of the assets you intended. The following steps will safeguard your legacy:
Coordinate and monitor your assets. Your estate comprises your cash and cash equivalents (e.g., stocks and bonds), real estate, and personal property. Before you can figure out what you want to give and to whom, you need to understand what you actually own. To begin an estate plan, you will need to gather deeds, bank