Estate Planning Lessons From Warren Buffett

As one of the creators of The Giving Pledge, encouraging wealthy people to give away most of their wealth to charitable causes, Warren Buffett’s estate plan isn’t like other billionaires’ estate plans. There are many takeaways for people of all different wealth levels, according to a recent article, “What Clients Can Learn from Warren Buffett’s Estate Plan” from Wealth Management.

Buffett says he’s changed his will several times after seeing how his children matured over the years. Building flexibility into an estate plan is important. It’s hard to tell which child will end up with a better financial situation, or which is more financially responsible. In addition, any time there is a significant life event, like divorce, moving to a new state, a new child in the family or marriage, estate planning documents should be reviewed, especially state-specific ones.

Buffett is celebrated for leading a relatively ordinary lifestyle, living in the same house, and driving the same car for many years. In a newsletter, he declared to Berkshire Hathaway shareholders his estate would be an open book, a simple last will and testament to be filed at the Douglas County Courthouse. The courthouse will no doubt be flooded by requests for the document, as it will become part of the public record once it’s filed.

Many families choose to use trusts to keep their bequests private, lighten their tax burden and facilitate wealth distribution.

A change to his estate plan will end his donations to the Bill & Melinda Gates Foundation. Buffett has given more than $40 billion to the foundation in the last fifteen years. His donations will cease when he dies. Buffet has put his three children in charge of a charitable trust. They will decide what causes to fund and how much to allocate.

For people of more modest means, charitable giving may include Donor Advised Funds or planned giving. You can also donate time and effort to nonprofits in your community.

Buffett praises his children’s ability to make good decisions, trusting them to carry out the family’s philanthropic goals while leaving room for them to deal with future changes in the tax laws and regulations governing nonprofits. His plan for the three of them to make unanimous decisions may lead to some wrinkles in the plan. However, he believes their shared values will overcome any disagreements.

Many estate planning attorneys recommend that parents objectively examine how their children interact before making them co-executors or joint owners of property. This may work well in some families.  However, for others, it may create obstacles. In some cases, it’s useful to hold a family meeting with the estate planning attorney to identify future issues.

Contact Attorney John Hoffman, Jr. for a free consultation!

Reference: Wealth Management (September 4, 2024) “What Clients Can Learn from Warren Buffett’s Estate Plan”