ElderLaw News — The Estate Planning & Elder Law Firm, P.C. — MD, VA, DC
ElderLaw News

ElderLaw News is a weekly e-newsletter that brings you reports of legal developments and other trends of vital interest to seniors and their advocates. This newsletter is brought to you by The Estate Planning & Elder Law Firm, P.C., William S. Fralin, Esq., President., William S. Fralin, Esq., President.

"When It Comes to an Inheritance, How Much is Too Much?"

...and Other Estate Planning Tips from Warren Buffett

At this year's Berkshire Hathaway annual general meeting, a tax and estate attorney named Marvin Blum asked Warren Buffett the question "I can design plans that eliminate estate tax and pass down great amounts of wealth to the next generation. But many of my clients come to me and say they want a plan like Warren Buffett's, leaving their kids enough so they can do anything, but not so much that they can do nothing. Now they ask me – and I am asking you – how much is that? And how do you keep from ruining your kids?"

When an older individual or couple has worked hard for decades to amass their wealth, they often want to make sure their children and grandchildren receive a nice inheritance, but that the inheritance does not take away their motivation to succeed on their own.

Mr. Buffett responded, "I think that more of our kids are ruined by the behavior of their parents than by the amount of the inheritance." The crowd applauded and cheered.

Mr. Buffett's response is thought-provoking, and lends itself to the presumption that the ultimate predictor of children's success is how they were raised and with what values, not the amount they stand to inherit from their parents. A $1 million inheritance in the hands of a child whose parents have not taught him the value of hard work and diligence will likely disappear more quickly than a $1 million inheritance in the hands of a child whose parents carefully instilled in him the desire to achieve personal success. As you can see, the dollar amount which answers the question "how much is too much?" will vary greatly by family and individual, and will be determined by the child's personal values and motivation. The individuals who are best equipped, then, to determine how much constitutes "too much" will be the child’s family and the individuals who know him best.

At the meeting, Mr. Buffett also remarked that he believes parents should communicate with their children as they create their estate plans, to permit the children to ask questions while their parents are still able to answer. He stated, "Your children are going to read the will someday...It's crazy for them to read it for the first time after you're dead. Then you're not in a position to answer questions – unless the Ouija board really works." Although a bit humorous, there is truth to Mr. Buffett's words. To eliminate any surprises and potential conflict among family members after a parent's death, we strongly recommend that our clients discuss their wishes with their children while they are able to do so.

Mr. Buffett mentioned that he rewrites his will (and, presumably, trust[s]) every five or six years, as well. Although this may not be necessary for everyone, The Estate Planning & Elder Law Firm strongly recommends that clients at least review their estate plans with an attorney at least periodically to ensure that they continue to reflect their wishes. As a rule of thumb, it is a good idea to review one's estate plan every time that individual or a loved one undergoes a major life change (birth, death, marriage, divorce, sickness, disability, etc.)

Note: News cameras were not permitted and there is no official transcript of Mr. Buffett's remarks at the 2013 Berkshire Hathaway annual general meeting.  Credit to http://www.theglobeandmail.com/globe-investor/investment-ideas/lessons-in-estate-planning-from-warren-buffett/article12022903/ for the quotations from Mr. Buffett.

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The Estate Planning & Elder Law Firm, P.C.

The Estate Planning & Elder Law Firm, P.C. is an elder law firm. We represent older persons, disabled persons, their families, and their advocates. The practice of elder law includes estate planning, estate and trust administration, powers of attorney, advance medical directives, titling of assets and designations of beneficiaries, guardianships, conservatorships, and public entitlements such as Medicaid, Medicare, Social Security, and SSI, disability planning, income tax planning and preparation, care management, and fiduciary services. For more information about The Estate Planning & Elder Law Firm, P.C., please visit our website at http://www.chroniccareadvocacy.com.

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This newsletter is not intended as a substitute for legal counsel. While every precaution has been taken to make this newsletter accurate, we assume no responsibility for errors, omissions, or damages resulting from the use of the information in this newsletter. The Estate Planning & Elder Law Firm, P.C. thanks the law firm of Hook Law Center for their input to this newsletter.

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