Warren Buffett Explains How You Should Avoid Surprises When Your Will is Read

Warren Buffett, 94, is one of the richest men in the world who has put lots of thought into his investments, as well as his estate planning. Buffett, who recently updated his estate planning documents, plans to give away all of his wealth and has been doing so throughout his lifetime. According to Forbes, “Buffett is likely the largest philanthropist of all time… donating more than $60 billion toward charitable causes.” He plans for much of the same to happen upon his death.

In fact, Buffett shared new details of his estate plan in a letter published recently, elaborating on how he intends to transfer the vast majority of his fortune to philanthropic causes. Buffett describes how he will continue making contributions to certain charities while he’s still alive, and upon his death, plans are in place for the remainder of his estate to go into a charitable trust overseen by his daughter and two sons. The three must then decide unanimously which charitable organizations to donate to and in what quantities.

Communicating Your Plans to Your Loved Ones

Buffett gives the advice that it is always important to be upfront with your family, no matter what your plans are. According to Buffet, there should be no surprises. He believes the following to be of utmost importance, whether you have modest or staggering wealth, “(w)hen 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.”

Yes. Have Your Children Read Your Will (and, More Importantly, Your Trust) Before You Sign it.

The above quote for Warren Buffett is accurate except that it fails to mention a trust. And I would modify his words slightly by saying to have them read your Will and Trust before you sign or before you die, so you have time to make changes. Many readers may be thinking that a Will only gets read after death. This is because of the fact that Hollywood almost always portrays the “reading of a will” after death in some sort of formal ceremony. This stereotypical Hollywood dramatization is pure fiction. There is no such thing as a “reading of the Will” ceremony that takes place after death. Usually a close family member simply finds the Will and Trust among the decedent’s papers, often in an Estate Planning binder (such as the ones we provide to our clients), and simply reads it, perhaps then sending copies to the rest of the family to read, and usually going back to the attorney who drafted the documents to help chart the course of next steps that the family needs to take.

Estate Planning Advice that Applies to Everyone

When it comes to offering estate planning advice, Buffet makes the following points:

• You Never Know What the Future will Bring: Buffet believes that it is important to have your estate planning documents done when you are young and to update them regularly. The reason for this is because you never know what life has in store for you, and you may end up temporarily or permanently incapacitated long before you retire. In such circumstances, having a Power of Attorney set up can be extremely useful.
• Be Specific with Your Instructions: Buffett was very specific when he spelled out how he wants the money he leaves to his wife to be invested. He asked that his trustee put “10 percent of the money in short-term government bonds and 90 percent in a very low-cost S&P 500 index fund.” Most people are not Warren Buffett and don’t leave this kind of detailed instruction, but if you want to exercise this type of “control from the grave,” that’s your prerogative — just be sure to specify it appropriately in your estate planning documents.
• Be Upfront with Your Loved Ones: Once you’ve made important decisions, as denoted in his quote above, Buffett believes that it is important to be upfront and share your thoughts and wishes with those who will be affected by them to avoid arguments, fights, and bad feelings. This is important because some may not understand why you made the choices you did, and the only time when you can offer explanations is while you’re still around.
• Don’t Be Remiss About Making Updates: The reason for Buffett’s most recent update to his documents is that while his trust in his adult children’s judgment hadn’t wavered, he’s realizing that, at ages 71, 69 and 66, they may not be able to distribute his entire estate during their lifetimes. Buffett took the opportunity to install three younger trustees to succeed his children, should they die before the trust runs out. Buffett communicated the plan to his children, who he nevertheless hopes will be able to distribute all of his assets.

Start Early and Communicate Often

When it comes to estate planning, you should plan to talk early and often about it with your loved ones. Inevitably, emotion will be part of the conversation, and it can quickly get out of control in a time of crisis when emotions are charged. This is why you should discuss your estate planning when you are healthy and when the family is already together, such as during birthdays and holidays.

Also, plan for several meetings, not just one. Expecting to start the conversation and have a resolution all in one meeting is not realistic. Instead, plan to have a few conversations at different times, until you get the details sorted out. The goal is to talk early and often and normalize the conversation; when you do, you’ll find emotions are less likely to derail this important exchange.

Get Your Estate Planning in Order for Peace of Mind

While an estate plan can’t prevent death or illness, it can protect your family from undue stress and emotional fallout once you’re gone. If you die without an estate plan, your legacy is left to your state’s intestacy laws and the nightmare of probate. If you become incapacitated without an incapacity plan (which is part of an estate plan), then your estate is subject to the nightmare of lifetime probate, where the court appoints a conservator or financial guardian to manage all of your financial affairs for so long as you remain incapacitated, which is often for the rest of your life.

To avoid the nightmare of probate and to have the peace of mind that your estate planning is in order, be sure to contact an experienced estate planner such as the attorneys at the Farr Law Firm when you are ready.