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Using trusts and estate planning to fight systemic racism

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1 year ago

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Estate and trust planning by financial advisors on behalf of Black Americans can tear down the historical barriers that have led to persistent racial disparities today, according to a new study.

The weight of personal or historical trauma related to wealth, low rates of representation for Black advisors and other minority professionals and daily signs that America is giving up on efforts to acknowledge and confront systemic racism could prove exhausting to anyone in wealth management seeking to lift up historically excluded groups through their work. And those come on top of the difficulty of breaking into the profession and running a successful business.

That’s why Lynne Marie Kohm, a professor of family law at Regent University School of Law in Virginia Beach, Virginia, and Peyton Farley, a 2022 graduate of the school — the co-authors of a published academic study titled, “Strategic Use of Trusts to Dismantle Racism: Building Trust through Trusts to Preserve and Empower Black Wealth,” used the analogy of a starfish to describe the importance of estate planning for Black Americans. Advisors cannot change political and financial systems on their own, but they can aid clients and their families.

“When professionals feel this fatigue, a good strategy for coping is to see that the help he or she can give just one client or just one family can and does make a tremendous difference,” Kohm and Farley said in an email interview. “Throwing one back into the sea may not make a difference to the beach loaded with thousands of starfish, but it makes all the difference to that one. Every client is worthy of attention, and serving just that one client can bring the joy of making a difference in a sea of challenge. Wealth building provides empowerment. And that client’s family wealth building will make a difference for the next generation.”

READ MORE: A plan to build Black wealth in one community — and nationwide

Personal and historical contexts

The study in the Dec. 1 issue of the Thurgood Marshall Law Review followed the researchers’ prior 2021 paper on how the wealth implications of the Tulsa Race Massacre of 1921 demonstrated the need for “wise financial and estate planning” for Black Americans. Other research has found, for example, that eliminating the so-called racial will gap between white and Black Americans would alone slash the wealth gap between the races by 10% over three generations. More generally, experts have pointed out how advisors can add value for clients of any background with estate advice ranging from a nudge toward a plan or revision, the idea of arranging a trust or a number of sophisticated generational transfer methods that protect their family’s wealth for the future.

Kohm and Farley’s paper traces the history of systemic racism in finance before exposing several myths that further impede Black generational wealth transfers. In all, they compiled a compelling case that estate and trust planning with advisors, attorneys, tax professionals or experts from any part of the fields touching wealth management alters the course of history.

“Trusts protect wealth and allow for family wealth growth and transfer, and having a transfer plan for wealth also works to protect wealth from waste and amelioration, effectively increasing wealth,” Kohm and Farley wrote. “Without changes deeper economic divides will be created in American society, leading to more extreme inequalities. Examining what role wealth has and can have in individual lives and families may be a key to beginning to dismantle racism one estate plan at a time to minimize or even extinguish this racial divide in the larger society.”

As they take on that work, though, advisors must also win over clients who have valid personal or historical reasons for avoiding professionals in fields like finance and medicine, according to Pat Brown, a wealth manager in the Lawrence, Kansas-based office of Creative Planning. The research paper made “a lot of great points” in seeking to explain how estate and trust planning act as “a tool against antiracism,” Brown said in an email. 

It prompted him to think of the idea of Black Americans from young to middle-aged households buying insurance policies and establishing a trust to collect the assets and other means of passing down wealth, he said. However, professionals like advisors and doctors have to navigate some distrust in the process.

“There are Black folks even today that don’t think they should go to doctors in 2025 because of the beliefs their parents and grandparents had that got taught to them,” Brown said. “Some of the simple strategies of establishing a trust and funding a trust are a great way of creating wealth and getting it passed down to generation after generation.”

READ MORE: The impact of the ‘racial will gap’ on wealth

Key takeaways

Kohm and Farley cover hundreds of years of history in the first section of the paper, with discussions of race massacres in Tulsa and elsewhere, vagrancy laws, the Freedman’s Savings Bank, redlining and housing segregation, and the legacy of racism in patents. Then they proceed to address six myths about trusts and estate planning: It’s only for the rich; the family already understands the older members’ wishes upon death; it’s too challenging; lawyers aren’t trustworthy; it’s too expensive; and the clients don’t care about what happens to “my stuff” when they pass away, the authors write. 

Trusts may pose varying degrees of complexity, but they offer a solution to many of those problems — especially when there is a fiduciary professional putting the clients’ interests first in all their advice and work on behalf of the entity. At their root, trusts offer a means of preserving wealth between generations for the settlor, trustor, grantor or donor who creates them.

“A settlor is simply the property owner who chooses to manage that property with a trust,” Kohm and Farley wrote. “That trust settlor has all power and authority to make the highest and best use of his or her wealth through accountable management of the assets in that trust — which can include anything from the family farm to the family innovations. Using that power and vesting it in a trusted individual or family member is wiser than leaving it to memory or a conversation that is hoped to be remembered, or to the default intestate succession rules of a state government, which could take years, and result in tremendous asset waste.”

To illustrate the specific importance among Black Americans, they include the examples of family farms that have failed to reach another generation after the original owners’ deaths or even celebrity cases such as the costly legal wrangling after Prince’s death in 2016. Instruments such as a special needs trust, a supplemental needs trust or a spendthrift trust, provision or clause prove highly beneficial.

On the other hand, Kohm and Farley point out that many Black families may avoid these key questions entirely if they involve working with a professional who doesn’t understand their cultural experience. Similar to the field of planning in which fewer than 2% of certified financial planners are Black, the dearth of Black estate lawyers poses a challenge to convincing many prospective clients of the benefits of trust and estate planning.

“Clients want to be served by lawyers with whom they have things in common. Naturally, this is important with race, culture, ethnicity, faith, etc,” Kohm and Farley said. “Overcoming fear and distrust of lawyers and decades of distrust of the law is not an insignificant hurdle, but can be well-bridged by black lawyers serving black families.”

READ MORE: To shrink the wealth gap, reframe money as an everyday topic 

Finding the encouragement in difficult work

While that area speaks to the continuing problem of underrepresentation of Black and Hispanic professionals, it further displays the essential nature of the tough and daily effort to confront the historical legacies of wealth in America — one client at a time — the researchers added.

“It was really not only instructive for us, but encouraging,” Kohm and Farley said of their study. “Every moment of work we spent on it was often upsetting, sometimes therapeutic, but in the end encouraging, and creating in us a desire to continue to work to make a difference. In many ways we sensed that our work was to honor those whose stories were critical to this research.”

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Accounting

Global ESG Reporting Standards and Double Materiality Compliance

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6 days ago

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August 9, 2026

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Corporate accounting departments face expanding reporting expectations as international sustainability disclosure standards achieve regulatory enforcement across major global jurisdictions. Chief Accounting Officers (CAOs) and corporate controllers are establishing rigorous internal accounting controls to treat Environmental, Social, and Governance (ESG) metrics with the same data precision, auditability, and governance as traditional financial statements.

Regulatory Harmonization Under Global Sustainability Frameworks
The implementation of standardized sustainability reporting frameworks—notably rules established by international sustainability accounting boards—has created unified expectations for public and large private enterprises. Corporations must report standardized metrics covering greenhouse gas emissions (Scope 1, 2, and material Scope 3), energy utilization, workforce demographics, and supply chain governance.

In Europe and other participating international jurisdictions, double materiality principles are mandatory. Under double materiality, organizations must report both how external sustainability risks impact corporate financial performance, and how internal corporate operations affect surrounding environmental and social structures.

Integrating Sustainability Metrics into Core ERP Systems
To provide auditable non-financial data, enterprise organizations are integrating specialized carbon accounting and ESG management platforms directly into core ERP systems. Automated data collectors capture energy utility invoices, logistics fuel consumption metrics, and vendor compliance records in real time.

Establishing automated, traceable data pipelines ensures that non-financial reporting is supported by clear audit trails. This structured approach allows external financial auditors to provide reasonable assurance on sustainability disclosures during annual corporate reporting cycles.

Financial Impacts and Capital Market Disclosure
Accurate ESG reporting directly influences corporate cost of capital and institutional credit ratings. Commercial lenders and institutional asset managers systematically incorporate sustainability metrics into risk pricing models. Companies that demonstrate transparent, verifiable progress in operational energy efficiency and climate risk mitigation benefit from expanded access to green bond markets and lower debt pricing.

Action Steps for Accounting Leadership
1. Implement Double Materiality Frameworks: Conduct comprehensive assessments to identify material financial and operational sustainability metrics.
2. Build Auditable Non-Financial Data Pipelines: Automate ESG data collection within core accounting software to ensure data integrity.
3. Align Sustainability with Annual Financial Filings: Prepare non-financial disclosures concurrently with financial statements to satisfy regulatory audit expectations.

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Accounting

Modernizing Internal Controls: Machine Learning and Continuous Monitoring in Auditing

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1 week ago

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August 5, 2026

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Internal audit departments and corporate risk managers are modernizing internal control frameworks by shifting from periodic sampling techniques to continuous monitoring and machine learning analytics. As operational data volumes increase across enterprise organizations, automated control testing ensures financial integrity, prevents corporate fraud, and streamlines annual audit engagements.

The Limitation of Periodic Audit Sampling
Historically, internal and external auditors evaluated internal controls by reviewing random samples of financial transactions—often analyzing less than five percent of total ledger entries. In complex enterprise environments, periodic sampling methods carry inherent risks of overlooking localized financial misstatements, unauthorized disbursements, or operational control breakdowns.

In 2026, progressive internal audit functions are utilizing automated continuous monitoring platforms that evaluate one hundred percent of financial transactions in real time. Continuous control auditing systems continuously monitor general ledger entries, procurement approvals, and expense reimbursements across all operating subsidiaries.

AI-Powered Fraud Detection and Anomaly Identification
Machine learning models trained on historical corporate financial data excel at identifying subtle transactional anomalies that indicate potential fraud or operational error. Automated systems instantly flag duplicate invoice payments, unapproved vendor creation, unusual journal entry timing, and unauthorized override of authority thresholds.

When an anomaly is detected, the automated auditing platform generates an instant risk alert, allowing internal audit teams to investigate root causes immediately. Early detection prevents minor operational errors from escalating into material weaknesses in financial reporting.

Streamlining External Audit Preparation
Continuous internal control monitoring delivers significant benefits during annual external financial audits. External audit firms can review continuous audit logs and automated control testing documentation, reducing the time required for manual field testing.

This integrated approach lowers overall audit compliance fees, reduces administrative burdens on corporate accounting staff, and provides senior management and audit committees with real-time visibility into the organization’s overall risk profile.

Core Implementation Guidelines
1. Transition to 100% Data Testing: Replace legacy sampling methods with automated continuous audit monitoring systems.
2. Deploy Anomaly Detection Algorithms: Implement machine learning models to identify unauthorized transactions and operational control overrides.
3. Align Internal and External Audit Workflows: Coordinate continuous control testing protocols with external auditors to optimize annual compliance cycles.

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Accounting

Automated Tax Compliance and Global Regulatory Harmonization in 2026

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1 week ago

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August 5, 2026

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Corporate tax accounting departments are navigating an era of unprecedented regulatory complexity as global tax harmonization frameworks take full effect alongside real-time digital tax reporting mandates. Tax directors and accounting teams are adopting cloud-based tax compliance automation tools to manage multi-jurisdictional tax liabilities and satisfy stringent reporting rules across international jurisdictions.

Implementation of Global Minimum Tax Provisions
The implementation of international tax reform agreements—notably the Pillar Two global minimum tax framework—has reshaped multinational corporate tax planning. Multinational enterprises with consolidated revenues exceeding established thresholds must ensure an effective tax rate of at least 15% across every jurisdiction in which they operate.

Accounting teams are implementing specialized tax calculation modules integrated directly into enterprise resource planning (ERP) platforms. These automated tools calculate effective tax rates per country, identify top-up tax liabilities, and generate standardized compliance documentation required by national tax authorities.

Real-Time Digital Invoicing and E-Reporting Mandates
Tax authorities across Europe, Latin America, and Asia-Pacific have enacted mandatory electronic invoicing (e-invoicing) and continuous transaction controls (CTC). Under these systems, corporate transaction data must be submitted electronically to government portals in real time at the point of sale or invoice issuance.

This shift toward continuous digital tax reporting eliminates traditional annual tax audits in favor of ongoing automated compliance monitoring. Accounting departments are upgrading invoicing software to ensure seamless XML data formatting, digital signature authentication, and real-time validation against tax authority databases.

Automation and Data Analytics in Corporate Tax Strategy
To keep pace with dynamic tax legislation, tax departments are transitioning from reactive compliance teams to proactive strategic advisors. Machine learning algorithms analyze corporate transactional data to identify tax credits, research and development (R&D) incentives, and cross-border transfer pricing adjustments.

By automating routine tax return filings and calculations, corporate tax directors can focus on long-term capital structuring, evaluating the tax implications of corporate mergers, and optimizing international supply chain networks.

Strategic Priorities for Tax Executives
1. ERP System Upgrades: Ensure enterprise software is capable of generating real-time, granular tax data required for global minimum tax compliance.
2. E-Invoicing Integration: Implement scalable e-invoicing platforms to satisfy regional continuous transaction control regulations.
3. Strategic Tax Analytics: Utilize predictive tax modeling tools to evaluate structural changes in corporate operations and cross-border trade.

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