Piling on my colleague Sarah Swan’s insights piece from last week, I wanted to highlight some of the wisdom contained in his most recent letter:
“When Susie died, her estate was roughly $3 billion, with about 96% of this sum going to our foundation. Additionally, she left $10 million to each of our three children, the first large gift we had given to any of them. These bequests reflected our belief that hugely wealthy parents should leave their children enough so they can do anything but not enough that they can do nothing.”
I love this message. It suggests a nuanced approach to parenting, legacy, and responsibility, emphasizing empowerment without fostering entitlement. The idea is to provide heirs with sufficient resources to explore their passions and take risks, but not so much that they lack the drive to be self-reliant or contribute meaningfully to society. In other words, wealth is a tool and not a crutch. This approach shows faith in the children’s ability to chart their own paths without excessive reliance on parental support.
“Father time always wins. But he can be fickle – indeed unfair and even cruel – sometimes ending life at birth or soon thereafter while, at other times, waiting a century or so before paying a visit. To date, I’ve been very lucky, but, before long, he will get around to me.”
By reaching age 94 in good mental and physical shape, Warren has been extraordinarily lucky. This passage reflects on the inevitability and unpredictability of mortality. The personification of “Father Time” as both an unstoppable and impartial force underscores the universal truth that no one escapes death. It’s also important to remember that everyone’s pockets are the same size six feet underground. Life can be unexpectedly brief or remarkably long, with no discernible pattern or fairness in its distribution. Time is the only currency you spend without knowing the balance, so spend it wisely.
“I’ve never wished to create a dynasty or pursue any 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 fidelity of successive generations to deal with the distribution of extraordinary wealth amid what may be a far different philanthropic landscape? Still, 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.”
So often, we see our clients fretting about future generations. This passage reveals a pragmatic and thoughtful approach to legacy, wealth, and decision-making. Warren’s choice not to create a dynasty highlights a preference for empowering the current generation rather than binding future ones to a specific vision. His trust in his children reflects confidence in their values and abilities but also acknowledges the unpredictability of future generations, whose circumstances and priorities may diverge significantly. By emphasizing the superiority of “live and well-directed brains” over a “dead hand,” Buffett critiques rigid control over wealth beyond their lifetime, recognizing that flexibility and adaptability are essential in addressing evolving challenges. This insight suggests a belief in the dynamism of decision-making, with a focus on enabling those best positioned to act in real time. Ultimately, this perspective underscores the importance of stewardship over strict control.
“I have one further suggestion for all parents, whether they are of modest or staggering wealth. 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. If any have questions or suggestions, listen carefully and adopt those found sensible. You don’t want your children asking “Why?” in respect to testamentary decisions when you are no longer able to respond. Over the years, I have had questions or commentary from all three of my children and have often adopted their suggestions. There is nothing wrong with my having to defend my thoughts. My dad did the same with me. I change my will every couple of years – often only in very minor ways – and keep things simple. Over the 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, became magnified, particularly when sons were favored over daughters, either in monetary ways or by positions of importance.”
This is so brilliant and rings true to everything we preach at Howe & Rusling. This passage offers profound insights into fostering transparency, trust, and understanding within families regarding inheritance and legacy planning. The advice to share and discuss one’s will with mature children before finalizing it underscores the value of proactive communication. By explaining the reasoning behind testamentary decisions, parents can mitigate potential misunderstandings, resentment, or confusion that might arise after their passing. This approach also ensures that children are prepared for the responsibilities they will inherit, fostering a sense of accountability rather than entitlement. The emphasis on listening to feedback and being open to suggestions demonstrates humility and a willingness to adapt, showing that legacy planning is a collaborative process rather than a unilateral declaration. This practice not only strengthens familial bonds but also ensures that the will reflects a shared understanding of values and priorities. Moreover, by defending their decisions, parents model critical thinking and open dialogue, reinforcing mutual respect and trust.
Disclosures: This material is for informational purposes only and is not intended to provide specific investment, legal, tax, or financial advice. The views expressed herein are those of the author and do not necessarily reflect the views of Howe & Rusling. Past performance is not indicative of future results. References to specific books, individuals, or third-party data are for illustrative purposes only and do not constitute an endorsement or recommendation of any investment strategy, product, or service. The opinions and commentary regarding market trends and historical performance are based on current information and historical data, which are subject to change without notice. Investing involves risks, including the risk of loss. Investors should consult with their financial advisor to discuss their specific circumstances and investment goals. Any quotes or insights attributed to Warren Buffett, Charlie Munger, or other individuals are used to highlight general principles and do not constitute investment advice or an endorsement of any particular approach. The content provided is for educational and illustrative purposes. It is not a solicitation to buy or sell any securities or other financial instruments. Certain statements contained in this material may constitute forward-looking statements. These statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those anticipated.
