It’s hard to imagine a time when Warren Buffett wasn’t widely known as the “Oracle of Omaha,” a wise yet frugal investor with a penchant for charitable donations. Buffett first became involved in Berkshire Hathaway (BRK.A), the multinational conglomerate holding company he oversees as CEO and chairman, in the 1960s. He achieved billionaire status in the 1980s and has been committed to giving away his fortune through annual donations for nearly two decades now. But, like everyone else, the 94-year-old investor knows he won’t be around forever.
“Father time always wins,” said Buffett in a shareholder letter released Nov. 25 that revealed a recent $1.1 billion donation and pulled back the curtain on his succession plans. “To date, I’ve been very lucky, but, before long, he will get around to me.”
The businessman’s newest charitable contribution comes in the form of Berkshire Hathaway stock that will benefit a network of family foundations connected to Buffett. Through 1,600 class A shares converted into 2.4 million class B shares valued at more than $1 billion, the billionaire is donating 1.5 million shares to the Susan Thompson Buffett Foundation—an organization named after his first wife—and 300,000 each to the Sherwood Foundation, Howard G. Buffett Foundation and NoVo Foundation, which are respectively run by Buffett’s three children: Susie, Howie and Peter.
Buffett, who currently has an estimated net worth of $149 billion, has given away more than $50 billion since pledging in 2006 to donate most of his wealth to charity. He makes annual gifts to both the aforementioned organizations and the Gates Foundation each summer, in addition to making additional donations to his family’s charities around Thanksgiving.
Upon Buffett’s passing, more than 99 percent of his wealth will be funneled into a charitable trust overseen by his three children, who will have ten years to disburse the funds. This plan, announced earlier this year, wasn’t always set in stone—Buffett previously intended for his late wife Susan Buffett, who died in 2004, to be in charge of donating his fortune. “For decades, we had both thought that she would outlive me and subsequently distribute the vast majority of our large fortune,” said Buffett in his shareholder letter. “That was not to be.”
While noting that his children “were not ready” to handle his Berkshire Hathaway funds 20 years ago, Buffett said he has spent the past few decades observing their ability to handle managing their various philanthropic organizations. Although this wait has made him confident in their ability to handle his fortune, it also means that, at ages 71, 69 and 66, “the expected life of my children has materially diminished since the 2006 pledge,” Buffett said. In case his heirs die before they are able to give out his fortune, Buffett revealed in the latest shareholder letter that he has additionally appointed a wait list of three potential successors who are “well known” to his children and “somewhat younger.”
Regardless of who is in charge of his trust, Buffett’s designated successors will only be able to make donations with unanimous votes—a provision the billionaire said he enacted to shield them from becoming besieged with requests from friends. The “unpleasant reality” is that those with large sums of money to offer are regarded “targets of opportunity,” said Buffett, noting that unanimous votes will allow his children to reject requests by stating responses like: “It’s not something that would ever receive my brother’s consent.”
Buffett also advised other families to read over their will with their children before it is set in stone. “You don’t want your children asking ‘why?’ in respect to testamentary decisions when you are no longer able to respond,” said Buffett, who has incorporated suggestions from his kids into his own will over the years. Buffett said both he and Charlie Munger, Berkshire Hathaway’s late vice chairman, “saw many families driven apart after the posthumous dictates of the will left beneficiaries confused and sometimes angry.”
Buffett hasn’t just been blessed with a family that has become closer due to his wealth instead of distanced because of it. The billionaire conceded in his letter that he has always had a “lucky streak,” one that began in 1930 “with my birth in the United States as a white male” and has continued throughout his lucrative career. “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.”
