Could will-writing help close the racial wealth gap?

New research from the Center for Retirement Research suggests will writing could help reduce the racial wealth gap between Black and White households in the United States.

According to a brief outlining the study's findings, disparities in will-writing between Black and White households have contributed to unequal wealth accumulation over generations, with Black households less likely to draft wills than their White counterparts.

Based on data going back several decades, the authors of the study said the racial wealth gap has remained stubbornly wide, with White households holding six times as much wealth as Black households as of 2019. According to the report, that gap is partly driven by differences in saving rates and asset returns, both of which are associated with preparing a will.

“Individuals with a will intend to leave larger bequests and are more likely to meet those expectations,” the researchers noted. “These bequests can increase wealth for future generations and compound over time.”

Using data from the Health and Retirement Study, which extends from 1992 until 2020, the authors modeled wealth disparities over three 20-year generations spanning from the 1980s up to 2040. They followed two complementary methods: a “top-down” approach that broke down relationships between inheritances, late-life wealth, and bequests; and a “bottom-up” approach estimating how an inheritance might compound into larger generational wealth.

Under each approach, they estimated the gap between a typical White household and a Black household based on actual will-writing rates; they then modeled how the gap might shrink if the two populations drafted wills at the same rate. At the end of both exercises, the researchers' models found having a level playing field on wills would have narrowed the wealth gap by roughly 10 percent at the end of three generations.

"While no one change is likely to completely close the racial wealth gap, interventions that increase the will-writing of Black households are one promising avenue for policy exploration," the researchers wrote.