Warren Buffett has shared valuable advice for parents regarding inheritance planning. In a nearly 1,500-word letter, the 94-year-old investor and CEO of Berkshire Hathaway detailed his thoughts on discussing inheritance with children. Buffett suggested that parents should read their wills to their children before signing them to avoid family conflicts and potentially strengthen family bonds.
This proactive approach, he believes, can prevent disagreements and ensure everyone understands the reasoning behind the distribution of assets. He reiterated a longstanding belief that “hugely wealthy parents” should leave their children enough money to do anything but not enough to do nothing. Buffett’s children, Howard, Peter, and Susan, will not inherit the bulk of his fortune but will oversee the family’s foundations.
For parents of more modest means, Buffett advised, “When your children are mature, have them read your will before you sign it. Be sure each child understands both the logic for your decisions and the responsibilities they will encounter upon your death.” He emphasized the importance of addressing any questions or suggestions from children and making reasonable changes to the will if needed.
Buffett’s advice on family inheritance
Buffett noted that his own children have posed questions about their inheritance, and he has often incorporated their feedback. He observed that families can be driven apart by wills that create confusion or jealousy, but shared wills in advance can bring families closer together. For context, Federal Reserve data from 2016 to 2019 indicates that the average American inheritance is $46,200, a stark contrast to the considerable sums involved in Buffett’s own plans.
Buffett included a unique provision in his will requiring unanimous approval from his three children for all donation decisions after his death. This clause, he explained, provides a clear response to grant-seekers and helps manage expectations and requests for donations. Buffett’s letter underscored his commitment to philanthropy, a philosophy he shares with other prominent figures like Bill Gates and Michael Bloomberg.
Buffett remains one of the wealthiest individuals in the world, with a net worth of $150 billion, and is a co-founder of the Giving Pledge, a commitment for billionaires to donate the majority of their wealth to philanthropic causes. By advocating for open discussions about inheritance and incorporating his philanthropic values, Warren Buffett continues to influence how wealth is managed and distributed both within families and to broader society.
