Every year I celebrate one specific occasion by myself. Just me and my laptop. I look forward to it.
I celebrate the day – more like half day – alone because, quite frankly, I can’t seem to find many other people who care to partake in the festivities. And I get it. Watching two 90-year-old men talk about business, investing, and life is not exactly made-for-movies thrilling. But I wouldn’t miss it.
The occasion is Berkshire Hathaway’s Annual Meeting, which has been live streamed for several years now. The two 90-year-olds are Warren Buffett, the CEO of Berkshire Hathaway, and Charlie Munger, Buffett’s long-time business partner.
For roughly four hours the duo makes initial remarks and then fields questions from shareholders on a range of topics. Every year I learn something new. And this year was no exception.
At one point in the Q&A session, a shareholder asked Buffett how his estate will be invested after his death. Buffett responded with an answer I’ve heard him offer up previously. It was nothing new or particularly profound.
But then, Buffett added something I had never heard him say before. He said, “All rich people get advised by their lawyers to set up trusts so that nobody could see your will and all that sort of thing. My will is going to be a public record, and you’ll be able to check at some point that I’ve been telling you the truth about what is going to get done. But 99.7%, roughly, of my estate will either go to philanthropies or to the federal government.”
That number hit me – 99.7%. In other words, all but 0.3% of Buffett’s wealth is going to be donated to charities or given to the government, I suspect in the form of estate taxes.
It’s a generous estate plan. Billions of dollars will go to the charities of Buffett’s choice. But leaving just 0.3% of his estate to heirs is a very low proportion, compared to most estate plans I’ve seen.
Buffett has long said his goal is to give enough to his kids that they could do anything, but not so much that they could do nothing. I knew he planned to give far more to charity than to his children. But this was the first time I’ve heard Buffett put a number on it – at least that precise of a number.
And then the thought struck me: Even a small percentage of a very large number can still produce a big result. So, I pulled out my trusty calculator.
According to Forbes, Buffett is worth about $110 billion. Even if he donated 99.7% of his wealth, and passed down only 0.3% to his family, that would still amount to….drumroll, please….$330 million to his heirs.
Buffett has a wife and three kids. Split evenly, that means an inheritance of $82.5 million apiece.
Estate taxes could chew up a good portion of that inheritance. His spouse would receive an unlimited amount from Buffett tax free. The inheritance to his children, however, would likely get hit with estate taxes, potentially leaving them with something more like $50 million each, again assuming Buffett split his estate evenly.
I’d say $50 million is enough to do most things in life – enough, even, to do nothing for most people. I’m not judging, though.
Look, there are two ways you can view Buffett’s plans. One would be, “Yeah, he should be generous. The fact that he’s giving 99.7% of his wealth to charity isn’t all that noble. That still leaves an absurd amount to his heirs.” Or two, you could say, “Oh wow, that’s great. Buffett is an example of how capitalism can work. And now he’s giving the vast majority of his estate back to society – even when he doesn’t have to. What a great guy.”
I tend to fall in the latter camp. I think it’s a natural tendency for most of us to be generous with other people’s money. “Give it away. You don’t need it.” But not nearly as generous with our own.
The error, I think, is believing people with more than us should be more willing to give. When, in fact, many of us have far more than most. Those less fortunate are likely gazing in our direction thinking, “Give it away. You don’t need it.”
Wealth is personal. There’s no right or wrong in what you do with it. But I applaud anyone willing to give generously to charity – whether their estate is as big as Buffett’s or billions less.