Last weekend was the Berkshire-Hathaway Annual Meeting. Although we missed this year (in order to attend a niece’s Bat Mitzvah in Memphis), our family has a long tradition of gathering in Omaha. Family traditions and family travel (such as our annual pilgrimage to Omaha), create powerful family glue.
The bombshell from this year’s meeting was Warren Buffett (age 94) announcing his retirement. Thanks for all the years of imparting so much wisdom to us. We hope those tips will keep coming, even in Buffett’s retirement years.
Three times over the years I’ve had the privilege of being selected to ask Buffett a question. Topics range from his views on estate planning, philanthropy, business succession planning, to how to raise kids in affluence. People hang on every word of his answers.
I’m honored that my first question to him in 2013 is featured in a new book entitled Family Wealth, Inheritance and Well-Being (Claudia Tordini and Richard Franklin). The subject was Buffett’s famous goal to leave his children “enough so they can do anything but not enough that they can do nothing.” Buffett’s reply shows how he evolved from his original plan to leave each $500,000: “I think more kids are ruined by the behavior of their parents than by the amount of the inheritance that they [receive].” Buffett’s current Will reflects a more generous bequest to his kids: “I’ve loosened up a little bit as I go along.”
In a Press Release dated November 25, 2024, Buffett divulges more about his updated estate plan. “I change my will every couple of years…. Charlie [Munger] and I saw many families driven apart after the posthumous dictates of the will left beneficiaries confused and sometimes angry. Jealousies, along with actual or imagined slights during childhood, become magnified, particularly when sons were favored over daughters either in monetary ways or by positions of importance.”
Hence, Buffett encourages parents to discuss the estate plan with children and avoid surprises. “Be sure each child understands both the logic for your decisions and the responsibilities they will encounter upon your death…. You don’t want your children asking ‘Why?’ in respect to testamentary decisions when you are on longer able to respond.”
Buffett is hitting on an important point that no doubt will strike a nerve with some. In my early years as a lawyer, the trend was more towards secrecy. The “Greatest Generation” was reluctant to share information with their “Baby Boomer” kids. That trend has shifted in recent years to align with Buffett’s advice. My experience today is that parents’ secrecy has generally given way to openness with their kids. However, be thoughtful in how you do it. I strongly recommend a series of family meetings, facilitated by an objective family consultant. Don’t start with the money. Better to lead with a discussion of family values rather than valuables. The conversation can gradually evolve into appropriate financial disclosures as the meetings progress and the family coalesces.
Buffett’s Press Release also describes how he leaves his Berkshire holdings (which “now account for 99.5% of my wealth”) to a trust to be disbursed to charities selected unanimously by three trustees. The initial trustees are his three children Susie, Howie, and Peter. Given that they are currently ages 71, 69, and 66, he designated three potential successor trustees who are “somewhat younger than my children” –yet more good advice.
Buffett elaborates that, over the years, he’s gained confidence in his kids. “I know the three well and trust them completely.” Accordingly, he’s willing to put them in charge. As to why unanimous, he reasons it’ll be easier for a child to say no when “besieged with earnest requests from very sincere friends and others” if they can blame their siblings. He or she can just respond, “It’s not something that would ever receive my brother’s consent.”
But Buffett acknowledges: “My unanimity clause, of course, is not a panacea—it clearly isn’t workable if you have nine or ten children or stepchildren. And it doesn’t solve the daunting problem of intelligently distributing many billions annually.” That “daunting” task will fall on shoulders of Susie, Peter, and Howie. Buffett knows that’ll be a burden, as “they have different views in many cases from both me and their siblings but have common values that are unwavering.” For example, like their dad, they have all eschewed “look at me” lifestyles.
Truly, Buffett comes through again with his treasure trove of tips. Given my passion to help families create a lasting legacy, Buffett’s focus on identifying and celebrating a family’s “common values” is particularly music to my ears. With all of his practical wisdom, Buffett is every estate planner’s best friend. So, thank you to my friend Warren, and congratulations on your well-earned retirement! You are a gift that keeps on giving.
Marvin and Laurie Blum with their hero Warren Buffett.
