Parents must read! Buffett teaches you estate planning: whether you have money or not, you must do this

Warren Buffett's latest shareholder letter: Revealing the philosophy of wealth inheritance

How should the inheritance be allocated in the end? It is a headache for many parents. In large families with large businesses, it is common for the children to have a big fight over the inheritance after the elders pass away.

It is something that many parents do not want to see when loved ones become enemies. But how can we solve this problem? The stock god Buffett has put forward a practical suggestion.

On the eve of Thanksgiving 2024, Buffett revealed the latest shareholder letter, sharing profound thoughts on wealth inheritance.

He revealed that his late wife Susan left 10 million US dollars to each of their three children in her will, marking the first time they gave such a large sum of money to their children.

Warren Buffett emphasized a core concept: parents who possess wealth should provide their children with sufficient resources so that they can "do anything", but not so much that the children "don't have to do anything".

Peter Buffett, the son of Warren Buffett, realized this early on. As the son of the stock god, he didn't spend recklessly all day long or enter Wall Street. Instead, he worked hard to pursue his dream of music and eventually became a well-known musician who won an Emmy Award.

Image source: Celebrity Net Worth Buffett and his son Peter Buffett

Buffett suggests: Parents must let their children read the will first.

Warren Buffett gives an important advice to all parents: "When your children reach adulthood, please let them read the will before you sign it."

He emphasized that this is not just about wealth distribution, but also about family communication and understanding.

Why is it important to let children see the will first? Buffett believes that many families experience confusion and conflict due to undisclosed decisions in the will. By allowing children to understand the logic of the will and the responsibilities they may face in the future, it can effectively prevent subsequent disputes.

When discussing the content of the will, he suggested that parents should patiently listen to their children's suggestions and adopt reasonable opinions as appropriate.

Charitable Thought: Wealth Should Not Be a Burden of Inheritance

In the stockholder letter, Buffett delves into his philanthropic philosophy.

He firmly believes that wealth should not be dynastic wealth, but should be used to create social opportunities and values. He and his two wives believe that equal opportunities should start from birth, and excessive flaunting of wealth is not worthy of praise, and they educate their children in this way.

According to Celebrity Net Worth, Buffett's net worth is $138 billion, but 99% of it was acquired after the age of 50.

He believes that true wealth should be used to help those who have fewer opportunities in life, so he plans to donate 99.5% of his assets to charitable organizations, with a large portion going to the charity foundation established by Bill Gates.

They are the founders of The Giving Pledge, which encourages billionaires around the world to donate at least 50% of their net assets to charitable organizations during their lifetime.

Image source: Billionaires Warren Buffett and Bill Gates photographed by Bloomberg.

Buffett sets a great example: his children's charitable contributions far exceed his own.

Buffett has full confidence in his three children, although they live financially comfortable lives, they are not obsessed with wealth. In fact, the time and effort they devote to charitable causes far exceeds Buffett himself.

To ensure that wealth is properly distributed to charitable organizations, Buffett designed a mechanism that requires unanimous consent of all the estate trustees. This not only prevents the abuse of resources, but also alleviates the pressure faced by children to make huge donation requests.

Buffett's Wisdom: Honesty is the Best Legacy

Buffett's shareholder letter to parents around the world conveys an important message, that is, to communicate openly with children and let them understand your decision-making logic, which is the most valuable way of inheritance.

Regardless of the amount of your wealth, what matters is to establish a family environment of mutual understanding and trust. Transparent and open family communication is the best way to avoid potential conflicts in the future.

Through his own practice, Buffett has taught a valuable lesson on wealth inheritance to parents around the world.

Further reading: Berkshire Hathaway is flush with cash! Funds pour into the leveraged market, is the irrational prosperity bubble here?

'Parents must read! Buffett teaches you inheritance planning: whether you have money or not, you must do this' This article was first published in 'encryption city'