Should Seniors Give It All Away like Buffett or “Die with Zero”?
Reviewing your estate plan is an important part of the year-end review sessions that we hold at Keen Wealth. At least annually, folks should make sure that their plan is still in sync with how they want to be cared for, how they want their assets distributed, and who they trust to settle their estate and preserve their legacy.
But an estate plan check-up is also a good opportunity to review your feelings around what your money means to you, both while you're still around to enjoy it and after the next generation takes over. On today's show, we discuss lessons from two different approaches to estate planning that all seniors should think about as they prepare their financial plans for a new year.
1. Warren Buffett: The value of transparency.
Just before Thanksgiving, Berkshire Hathaway published a news release that included some thoughts from Warren Buffett about his estate planning.
Buffett famously signed the Giving Pledge and, since 2006, has divested himself of 56.6% of his shares in his company. When Buffett's wife Susie died, she left each of the couple's three children $10 million. As for the remainder of Buffett's approximately $150 billion fortune, Buffett writes, "I’ve never wished to create a dynasty or pursue any plan that extended beyond the children. I know the three well and trust them completely."
However, he doesn't know what kind of adults his grandchildren or great-grandchildren will be years after he’s gone. Since his children are 71, 69, and 66, he has formed trusts to protect his estate in the event that one of them passes unexpectedly. But he writes, "I hope Susie, Howie, and Peter themselves disburse all of my assets" to charity. And, crucially, Buffett has made a provision that all three of his children have to agree on charitable recipients.
If it seems odd to you that Buffett, despite having grandchildren, doesn't want to make any arrangements for future generations – at least not publicly – remember that all families are different, and every senior's goals are different. Rupert Murdoch, for example, has been locked in lengthy legal battles trying to secure exactly the kind of dynasty that Buffett says he wants to avoid.
Perhaps the most important lesson from Buffett's letter is this:
"I have one further suggestion for all parents, whether they are of modest or staggering wealth. When your children are mature, have them read your will before you sign it."
Years from now, I suspect we aren't going to read any interviews from Buffett’s children about how shocked they are that he wants them to give his fortune away or see lawsuits fighting for chunks of the Berkshire Hathaway empire. Buffett has been transparent about his wishes for decades. And, from my own experience helping folks plan their estates -- and even facilitating tough conversations among multigenerational families -- that transparency can make settling a loved one's estate so much easier. There's often no avoiding some hurt feelings or resentment. But when you're clear about your wishes and you work with pros to get everything in writing, your loved ones are much more likely to respect your wishes, even if they don't necessarily agree with every provision.
2. Bill Perkins: "Die with Zero"
Coincidentally, around the same time I read Buffett's letter, I listened to a podcast conversation between Peter Attia and Bill Perkins, author of the popular book Die with Zero: Getting All You Can from Your Money and Your Life. While Buffett and Perkins both, in their own way, are suggesting that our last checks should bounce, Perkins really wants folks to get more from their money than just more money. The famously frugal Buffett lives simply, works hard, and invests wisely, which are all admirable traits that have helped him build wealth over time. But, depending on which book or article you read, it's hard to say that he and his family have enjoyed his wealth as much as you might imagine.
At one point in the podcast, Perkins recalled passing on the opportunity to backpack through Europe when he was younger. He figured that when he was in his 40s or 50s, he'd be able to take a better version of that trip, see more sights, and stay in nicer hotels. But now he realizes that he missed out on that specific experience, at that specific moment of his life, and the decades of compounding memories he would have enjoyed.
That story really resonated with me and my 30+ years of financial planning experience. I've worked with so many folks who had the means to enjoy life a little more but were so worried about topping off their savings or "hitting a number" that they never visited Europe, took their dream cruise, or moved across the country to spend more time with their grandkids. They kept working and saving for "someday." And, in too many cases, they passed before "someday" came.
3. Keen Wealth: Make a comprehensive plan to enjoy your life and your money.
Giving back, family, and fun are all important aspects of a successful retirement and a lasting legacy. Each senior needs to find the right balance between them, while also keeping their short-term and long-term needs in perspective. Treating your nest egg like a jackpot isn't going to make you any happier than keeping it locked in a safe. Comprehensive financial planning can help folks keep their money, their lives, and their goals in sync while also securing retirement and, if you wish, providing a legacy for your heirs to carry on.
There's still time to discuss some important financial planning considerations that have to be locked in before the end of the year. Get in touch with Keen Wealth and let's meet soon.
About Bill
Bill Keen is a financial advisor with over 30 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he focuses on providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to Forbes, U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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