Berkshire Hathaway's CEO and legendary investor Warren Buffett warned that estate planning could determine the happiness and harmony of family after one's passing. "Time is the victor, but it can also be mercurial," the 94-year-old billionaire wrote in a rare candid open letter released on Monday.

Buffett indicated that he will once again donate part of his company's shares (worth about 1.15 billion dollars) to four family foundations. $Berkshire Hathaway-B (BRK.B.US)$ After this donation, he still holds 206,363 shares of Class A stocks, valued at about 148 billion dollars.

As in November last year, Buffett converted 1,600 shares of Class A stocks into 2.4 million shares of Class B stocks, which he donated to the Susan Thompson Buffett Foundation (named after his late first wife) and the foundation overseen by his children.

Buffett's three children, now in their 60s and 70s, need to make unanimous decisions on how to use their father's money. Buffett stated in new remarks to shareholders that this requirement would provide his children with a degree of protection from bombastic demands. "I know these three people very well and trust them completely," he wrote.

Buffett's significant position in Berkshire Hathaway means that a rapid sale of his stocks could shake the stock price. He wrote that his children should gradually distribute his shares, and the distribution method "must never betray the special trust that Berkshire shareholders have in Charlie Munger and me."

Buffett's Advice

Talking about death is a topic that is difficult for many to broach, and planning for the distribution of wealth is similarly cumbersome. However, as the global economy is about to face a massive wealth transfer of approximately 84 trillion dollars, Buffett advocates not avoiding such unpleasant topics to prevent underlying familial conflicts.

As one of the wealthiest individuals in the world, Buffett's net worth exceeds 151 billion dollars. He committed as early as 2010 to donate at least half of his wealth to charitable causes. Although Buffett's wealth surpasses what most can imagine, he offers advice applicable to all parents:

“Regardless of wealth, when your children are mature enough, let them read your will before you sign it.”

Buffett believes that a will should be a conversation between parents and children. He suggests that parents explain the logic behind decisions in the will and the responsibilities their children will assume in the future, while also earnestly listening to their feedback and incorporating reasonable suggestions. He admits that over the years he has shared will contents with his children and listened to their opinions. He wrote: “There's nothing wrong with needing to defend your thoughts; my father did the same back in the day.”

However, in the USA, many consider “talking about money” a taboo. According to a Fidelity Investment survey, 56% of Americans say their parents never talked to them about money, yet 81% believe that receiving financial education during their youth would be very beneficial.

Buffett mentioned that if the content of a will is vague or hasn't been discussed in advance with family members, it could lead to family disputes. “Over the years, Charlie (the late business partner Charlie Munger) and I have seen many families turn against each other after executing the wishes of a will,” he wrote.

Especially when there are biased arrangements among children in the will, this tension can be amplified. On the other hand, he noted that a will that has been thoroughly discussed can help family unity. He emphasized, “You don’t want your children questioning the decisions in your will with a ‘why’ when you cannot respond.”

Buffett follows a core principle when it comes to wealth distribution: "Super-rich parents should leave their children enough wealth to do anything, but not so much that they can do nothing."

Although he previously donated a large amount of wealth to the Gates Foundation, he recently stated that this funding will no longer go to the Gates Foundation after his death, but will instead be managed by a new charitable reits handled by his three children. Buffett also revealed that he allocated an additional 1 billion dollars to the family foundation. He firmly believes that planning ahead and communicating openly can prevent many potential inheritance disputes and help family members better face the challenges brought by the "massive wealth transfer."

Berkshire's Class B shares have risen 34% this year, while the s&p 500 index has increased by 26%. Earlier this year, the company joined the club of USA companies with a market cap of over 1 trillion dollars.

Editor/rice