Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }

Ryan Enn Hughes/The Globe and Mail

I've never had the pleasure of meeting Marvin Blum. But if I ever do, I'd like to shake his hand.

Mr. Blum is a tax and estate lawyer from Fort Worth, Tex. On May 5, at the Berkshire Hathaway annual general meeting, Mr. Blum asked Warren Buffett a question about estate planning. I thought it was the best question of the weekend.

The focus of the Berkshire AGM is usually the economy, investing, and Berkshire's many businesses. There are inevitably questions about Mr. Buffett's succession plans. But Mr. Blum's question stood out, because it was much more personal.

Story continues below advertisement

Here are his exact words:

"I can design plans that eliminate estate tax and pass down great amounts of wealth to the next generation. But many of my clients come to me and say they want a plan like Warren Buffett's, leaving their kids enough so they can do anything, but not so much that they can do nothing. Now they ask me – and I am asking you – how much is that? And how do you keep from ruining your kids?"

This is the question I hear again and again in my meetings with clients, and the monthly TIGER 21 groups I attend in Canada and the U.S.: "I want to give my kids a leg up in the world. But I don't want to turn them into lazy, do-nothing spendthrifts." Mr. Buffett's answer was balanced and well-considered. I think it can teach everyone a lot about estate planning – no matter what your net worth.

"I think that more of our kids are ruined by the behaviour of their parents than by the amount of the inheritance."

This was the first sentence of Mr. Buffett's answer; the crowd applauded and cheered. It's very true: if you want to make sure your kids don't grow up to be spoiled brats, focus less on the structure of your estate and more on the environment they grow up in, and what you show them about how you handle money.

"I'll say this: I've loosened up a little bit. Every time I rewrite my will, my kids are happy, because they know I am not reducing the amount."

This was as close as Mr. Buffett came to answering the question of "how much to leave." I remember reading a number of years ago that Mr. Buffett intended to leave his children very little of his wealth. Clearly, his thinking has evolved.

Story continues below advertisement

As his kids have matured and become successful in their own right, obviously Mr. Buffett feels more comfortable with leaving them a more substantial portion of his estate. I'm glad to hear that. I've seen a number of situations where children become bitter and resentful, because they feel they haven't been treated "fairly" in their parents' wills.

Which leads to Mr. Buffett's next point:

"Your children are going to read the will some day … It's crazy for them to read it after you're dead for the first time. You're not in a position to answer questions – unless the Ouija board really works."

Lack of communication is a very common problem with estate planning. Too often, privacy leads to disaster, with family members bickering and fighting with each other. Far better to have conversations with your heirs before the will is read. Even if that conversation is awkward or uncomfortable, you can explain your intentions and your rationale, and hopefully avoid problems before they begin.

"I rewrite my will every five or six years …"

A minor point mentioned in passing, but still important. I'm still amazed at how many people write a will and let it sit in their safety deposit box for the next twenty years. Good to hear Mr. Buffett hasn't done this. As his thinking about inheritance has evolved, so has his will.

Story continues below advertisement

"I do think it is very important in wealthy families once the kids are a certain age … they should be participants in the will."

An interesting way to look at the estate planning process: as a family responsibility, not just a personal responsibility. More and more wealthy families are coming around to this perspective, particularly business owners, who need to be very clear about succession in the family business.

"I do think that if you're very wealthy … the money has far more utility to society than to create a situation where your kids don't have to do anything in life except call a trust officer once a year and tell him how much money they want."

This comment isn't surprising, considering Mr. Buffett's public position on the necessity of estate taxes. But it's also a clear articulation of how Mr. Buffett views charity as a "responsibility to society." I agree, and most of the high net worth individuals I know agree with him as well. Over the past decade, I've seen a dramatic increase in "directed giving" – that is, doing more than simply writing a cheque to a charity – and I expect that trend will continue in the years to come.

========================================

Thane Stenner is founder of Stenner Investment Partners within Richardson GMP Ltd., as well as portfolio manager and director, Wealth Management. Thane is also managing director for TIGER 21 Canada. He is the bestselling author of True Wealth: an expert guide for high-net-worth individuals (and their advisors). (www.stennerinvestmentpartners.com) (Thane.Stenner@RichardsonGMP.com)

Story continues below advertisement

The opinions expressed in this article are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson GMP Ltd. or its affiliates.

Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies