The Other Buffett Letter

Warren Buffett is renowned for his ability to make money and for having run a very profitable business for an exceptionally long time. Annually, he writes a letter to the shareholders of Berkshire Hathaway. Investors eagerly anticipate the opinions Buffett expresses in these letters on a wide range of issues. This year, it is not the annual investment letter I found the most interesting, but rather the short letter made public over Thanksgiving about his philanthropy and his children.

This letter was attached to a corporate release that disclosed Buffett’s decision to make gifts to four Buffett family foundations. My attention was caught not by the size of the gifts but by his reflections on life and family. In particular, Buffett provided some personal reflections on his three children, which I found most insightful, especially from this very private man.

He recalled that when his wife passed in 2006, her estate was $3 billion. She left $10 million to each of their three grown children because of the Buffetts’ belief that the children of wealthy parents should “have enough to do anything but not enough to do nothing.”

Buffett stated that, at his wife’s passing, he did not believe that his children, who were in their 40s and 50s, were ready to oversee the responsibility of the ‘staggering wealth’ that would be available for philanthropy. But, in his recent letter, Buffett stated that time passes and things change. His oldest child is now in her early seventies.

Buffett went on to comment that he had no desire to create a dynasty or pursue any plan of being able to control his wealth beyond his life or the lives of his three children. He expressed his deep trust in his three children’s decision-making and alluded to the fact that dead people should not try to exercise control over their children.

Warren explained that he has changed his will every couple of years as his wealth has grown, and his understanding and maturity of his children have evolved. Instrumental to that issue is his belief that his children should read and discuss with him the reasons and thoughts behind the changes in his will. He is convinced that hearing directly from the author of a will and being able to discuss the context of the changes avoids confusion. He said it is hard to understand why a will was crafted in a certain way if the writer is dead when it is read to the heirs for the first time.

He closes his candid letter by stating how proud he is of his children. He recognizes that they are different from him and do not necessarily agree with him on all issues, but they are financially comfortable, and, most importantly, they are not preoccupied with their wealth. He believes that they will be wonderful stewards of his family’s legacy and the potential good that it can do.

Carl Gambrell