Talking frankly with heirs can lessen feelings of resentment or jealousy, experts say. Photo / 123rf
Talking frankly with heirs can lessen feelings of resentment or jealousy, experts say. Photo / 123rf
When one of the world’s wealthiest investors offers parents advice about assets just before one of the biggest family holidays of the year, a lot of people pay attention. In this case, experts say they should listen.
“When your children are mature, have them read your will before you signit,” Berkshire Hathaway CEO Warren Buffett wrote this week in an unexpected letter to shareholders. “Be sure each child understands both the logic for your decisions and the responsibilities they will encounter upon your death.”
Buffett, who has been in the top 10 lists of billionaires for decades, included the advice as part of an announcement about his latest donations of Berkshire shares to his family’s foundations. Several estate planners agree with Buffett’s suggestion.
“In my experience, I have seen bad things happen when children are surprised,” said Lawrence J. Macklin, president-elect of the National Association of Estate Planners & Councils.
“Most parents want to treat their children equally, but some find that it’s appropriate not to, for whatever reason - maybe one child has been very successful and the others are not.”
Buffett said he’d seen families brought closer together by discussing a wealthy parent’s will before their death. He’d also seen “families driven apart after the posthumous dictates of the will left beneficiaries confused and sometimes angry”.
Talking frankly with heirs can lessen feelings of resentment or jealousy that arise when a child is caught unawares after their parent is dead, experts said.
“You can nip that in the bud by having that conversation ahead of time,” Macklin said.
Some people put off conversations about wills to avoid dealing with conflict or talking about death. But Macklin said it’s best to have these conversations as soon as possible.
“Having money discussions a generation or two ago was a no-no, but now I think it’s much more widely accepted and done,” he said.
On the other hand, John T. Midgett, an attorney and past president of theestate planner association, prefers not to talk about money specifically - focusing instead on who will be in charge of making decisions, including about medical treatment and distribution of assets. He also said it makes sense to talk about sentimental objects, which are often the source of conflict.
“For example, if I owned a piano, leaving it to a child who doesn’t play the piano wouldn’t make much sense,” he said, especially if there’s another child who took piano lessons growing up. “‘Is there something in the house that you particularly have a fondness for that you would like to see go to you and not to your siblings?’ That’s a good question to ask.”
Talking about money, Midgett said, can change the dynamics in a family, raising questions like, “‘Dad’s got more money than he really needs. Why doesn’t he give it to us?’ Or the pillow talk, where the spouse says, ‘You know, we really could use an addition to our house. Why don’t you ask your dad for the money?’”
“I would suggest that we talk about the map, not the treasure that’s at the end,” he said. “Because the map gives comfort to your family, and at least you can explain the logic [of] why are we turning left instead of turning right.”
It’s not a bad idea to follow Buffett’s advice of having mature children look at estate planning documents before they’re signed, Midgett said, as long as parents make the final decision: “The estate plan should be your own.”
Warren Buffett, CEO of Berkshire Hathaway. Photo / AFP
Two other estate planners contacted by The Washington Post, Tereina Stidd, with the American Academy of Estate Planning Attorneys Inc, and attorney Monique Lavender Greenberg, also generally agreed with Buffett’s advice.
But Buffett’s approach doesn’t make sense for everyone, said lawyer Michael Ettinger, whose firm specialises in elder law estate planning.
Discussing an estate plan in advance, Ettinger said, can lead to hurt feelings, rupture family relationships or cause estrangements. It can also give children an effective veto power over their parents’ plans, Ettinger said.
“He has a close family,” Ettinger said of Buffett. “But not everybody has close families.”
Ettinger cited a personal example, saying that his father told Ettinger’s brother that he would disinherit him. “Decades of hurt” could have been avoided by revealing the will only after death, Ettinger said. “We don’t need to know that in advance,” he said.
Parents can instead include messages for their children as a narrative with the trust or will, Ettinger said.
“Explain it to your son and daughter, your thinking, why you did what you did, to help soften the blow,” he said. “So they understand and they’re not left questioning. And you always tell them, ‘We love you all the same, but we decided to do this for this reason or that reason.’”
