Warren Edward Buffett has penned down a nearly 1,500-word letter that serves as a guiding note regarding inheritance for parents and children alike
Acquiring wealth can be difficult and a journey filled with lots of ups and downs but can be equally strenuous if distributing it or drawing up a will. The 94-year-old American businessman and philanthropist Warren Edward Buffett has penned down a nearly 1,500-word letter about how he plans to pass on his $84 trillion wealth. His letter can be a guiding note regarding inheritance for parents and children alike.
“The massive wealth I’ve collected may take longer to deploy than my children live. And tomorrow’s decisions are likely to be better made by three live and well-directed brains than by a dead hand,” Buffett wrote in the letter on Monday. “But these successors are on the wait list,” he added.
In the same letter he announced that he is donating shares worth $1.1 billion of Berkshire Hathaway to four charitable foundations, according to a Bloomberg report. He also mentioned giving nearly half his wealth to charity and all this will be executed by his three children.
1. Familiarise your children with will
Buffett suggests a good practice is to draw up a will and read it to your children. Make them understand the reasoning behind the succession plan before signing it. According to Buffett, a will isn’t just a document to pass on wealth but highlights the responsibilities the children will carry out after the death of the parent.
“When your children are mature, have them read your will before you sign it,” Buffett said in his letter. “Be sure each child understands both the logic for your decisions and the responsibilities they will encounter upon your death.”
2. Importance of financial literacy
The billionaire highlighted that discussing money-related topics are considered a taboo in many American families. He mentioned that it will be beneficial for the children to be financially educated at a young age, knowledge that will be advantageous throughout their life particularly in taking forward the inherited wealth. It will also help children to grow into “good and productive citizens”.
3. Collaborate with children when making will
Buffett suggested that making a will shouldn’t be a lonesome decision of parents but rather a deliberative effort together with the heirs. He pointed out that over the course of nearly nine decades, he has seen many families have drifted away due to differences that cropped up in carrying out the succession plan or conditions in it. He suggested that if the plan is drawn together with inputs from children, it is more likely to hold the family together after the death of the parents’. The heirs should be given space to ask questions regarding clauses in the will and the changes recommended by them should be incorporated.