America’s most famous investor has advised all parents – regardless of their wealth – to let children read their wills.
Warren Buffett said that parents of “modest or staggering wealth” should let their children read their wills before signing them.
The father of three, who has amassed a personal fortune of $150 billion, advised parents in a letter on Monday that every child should “understand the logic behind your decisions and the responsibilities they will face upon your death.”
“If you have questions or suggestions, listen carefully and adopt whatever suggestions you feel are appropriate,” Buffet said. “You don’t want your kids asking, ‘Why?’ in testamentary decisions when you can no longer respond.’
A certified financial planner, Douglas Boneparth, told it CNBC that he agreed with Buffett’s advice.
“These are difficult conversations, but they are meaningful and, if approached properly, can strengthen relationships,” he said.
“You want your children to have realistic expectations about their legacy.”
Boneparth, founder and president of Bone Fide Wealth in New York City, added, “Children’s imaginations can run wild with what they think they should get.”
Billionaire Warren Buffett told parents to let their children read their wills before signing them
He added that parents should be as clear and thorough as possible about who gets what and why, so that any tension or hurt feelings can be addressed while you are there to respond.
The 94-year-old Buffett recalled in his letter that over the years he has witnessed “many families driven apart after the will’s posthumous dictates left beneficiaries confused and sometimes angry.”
“Jealousies, together with actual or imagined slights during childhood, were magnified.”
Boneparth added that it is important to explain why certain inheritances are not equally distributed and why.
For example, one child may be more financially stable, while another child needs more help.
Carolyn McClanahan, founder of Life Planning Partners in Florida, said parents should also consider their child’s financial situation and history when deciding to discuss their inheritance.
She said that in rare cases it may be advisable for parents to be more careful with a child who has exploited them financially or if a child is irresponsible with jobs or money.
Hearing that they will inherit a large amount of money can further diminish their ambitions and drive to succeed on their own.
Buffett also talked about why he won’t leave his vast fortune to his children, but will instead give away 99 percent of the money he made through his company Berkshire Hathaway.
“These are difficult conversations, but they are meaningful and, when approached properly, can strengthen relationships,” says certified financial planner Douglas Boneparth
Buffett recalled in his letter that over the years he had witnessed “many families driven apart after the will’s posthumous dictates left beneficiaries confused and sometimes angry.”
This comes after the 94-year-old billionaire announced why he won’t leave his vast fortune to his children (pictured with Buffett), but will instead give away 99 percent of the money he made through his company Berkshire Hathaway.
Buffett wrote, “I never wanted to create a dynasty or pursue a plan that extended beyond the children.
‘I know the three well and trust them completely. Future generations are another matter. Who can foresee the priorities, intelligence and loyalty of successive generations to deal with the distribution of extraordinary wealth in what may be a very different philanthropic landscape?’
He appointed three independent trustees to oversee his philanthropy after his three children, anticipating that it would take longer to disburse his wealth than his children are alive.
In addition to appointing trustees, Buffett also donated an additional $1.1 billion of Berkshire Hathaway stock to his family’s four charitable foundations.
The identities of the trustees are not known, but he said each of them is well known by his children.
“They are also a bit younger than my children,” Buffett wrote.
‘But these successors are on the waiting list. I hope that Susie, Howie and Peter will pay for all my assets themselves.’
Buffett has made an annual donation to the four family foundations since 2006.
These are the Susan Thompson Buffett Foundation – named after his late wife – The Sherwood Foundation, The Howard G. Buffett Foundation and NoVo Foundation.