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Warren Buffett surprised shareholders on Monday with a near-1,500-word letter alongside his usual Thanksgiving gift to four of his family's foundations.
The famed investor and Berkshire Hathaway CEO said he would shortly convert 1,600 of his Class A shares into 2.4 million Class B shares, worth about $1.2 billion.
He pledged to distribute 1.5 million of those shares to The Susan Thompson Buffett Foundation — named after his late wife — and 300,000 shares to each of his three kids' foundations: The Sherwood Foundation, The Howard G. Buffett Foundation, and NoVo Foundation.
In his mini letter to shareholders, Buffett said the gifts would reduce his personal stockpile to 206,363 A shares, worth $149 billion. He's now given away 56.6% of his shares since pledging 99% of them to good causes in 2006.
The "Oracle of Omaha" said he and his late wife owned 508,998 A shares at the time of her death in 2004.
All else being equal, if Buffett still owned all those shares they'd be worth $367 billion, making him the world's richest man and wealthier than Elon Musk, who's worth $348 billion per the Bloomberg Billionaires Index.
Buffett said his late wife's estate was worth about $3 billion, and 96% of that went into the pair's foundation. She bequeathed $10 million to their three children — Howard, Susie, and Peter — which was "the first large gift we had given to any of them," he said.
"These bequests reflected our belief that hugely wealthy parents should leave their children enough so they can do anything but not enough that they can do nothing," Buffett wrote.
The legendary stock picker reiterated his comments earlier this year that he now believes his kids are ready to handle the vast responsibility of distributing his Berkshire shares, which make up 99.5% of his wealth.
But he acknowledged that his children, now in their late 60s and early 70s, might be unable to deploy his fortune before they die. "And tomorrow's decisions are likely to be better made by three live and well-directed brains than by a dead hand," Buffett wrote.
"As such, three potential successor trustees have been designated. Each is well known to my children and makes sense to all of us. They are also somewhat younger than my children," Buffett said, adding those individuals are "on the waitlist" and he hoped his children disbursed all his assets.
Buffett explained why the foundation that holds his wealth after he dies will require a unanimous vote for every action it takes. The investor said his children will be inundated by requests and the policy will help ensure the money is used wisely. Also, when one says "no" to a request for a gift, they can prevent follow-up asks by firmly saying their siblings would never approve it.
The billionaire also offered some advice on passing down wealth.
"I have one further suggestion for all parents, whether they are of modest or staggering wealth," he said. "When your children are mature, have them read your will before you sign it."
Involving them in the process will ensure they understand your logic and their post-mortem responsibilities, Buffett said.
In the letter, Buffett reflected on how lucky he was to be born in the US as a white male. He noted that his two sisters, Doris and Bertie, grew up with fewer opportunities than him.
Buffett said he felt confident he'd be rich early in his life, but he never dreamed of the wealth that has become attainable in the US in recent decades.
"It has been mind-blowing — beyond the imaginations of Ford, Carnegie, Morgan or even Rockefeller," he said. "Billions became the new millions."
Buffett said that "the real action from compounding takes place in the final twenty years of a lifetime. By not stepping on any banana peels, I now remain in circulation at 94 with huge sums in savings — call these units of deferred consumption — that can be passed along to others who were given a very short straw at birth."
The investor said he and both his wives believed in equal opportunity at birth and didn't find conspicuous consumption to be "admirable," and he was pleased so many of his shareholders have gifted their wealth to society.
Buffett added that his children shared his and his siblings' values and while they're "comfortable financially," they're not "preoccupied by wealth. Their mother, from whom they learned these values, would be very proud of them. As am I."
