Warren Edward Buffet, known as one of the most influential figures in business and finance, warned all parents to let their kids read their will before they sign it.
In a letter published Monday, the "Oracle of Omaha" said doing so will help ensure children understand the logic behind the decisions and what their responsibilities likely will be upon the death of their parents. This would effectively prevent families from being driven apart due to the decisions written in the will.
"Be sure each child understands both the logic for your decisions and the responsibilities they will encounter upon your death," Buffet wrote in the letter.
The finance mogul also said his advice applies to families of all financial status, regardless of whether they are wealthy or if they have "modest or staggering wealth."
What Do Other Experts Say?
Douglas Boneparth, a certified financial planner, echoed Buffet's advice and said having tough conversations with their kids can prevent their imaginations from running "wild."
Additionally, it would give parents the opportunity to explain why the finances were split the way they were, especially if the inheritance is not split equally between siblings. For instance, one child may receive more because they helped with paying the down payment for a home or if they need to pay more for college, Boneparth said, as reported by CNBC.
He also noted that parents should explain why another child would receive less. This may be because they are in a better financial situation or other circumstances.
That said, CFP Carolyn McClanahan recommends against discussing inheritance with a child who has previously exploited their parents financially or is irresponsible with their job or money.
What Does Statistics Say?
Buffet's letter comes after a Fidelity Investments State of Wealth Mobility study found that 56% of Americans said their parents never spoke of money with them when they were children. Strikingly, 82% said they wished their parents had discussed finances with them, adding that it would have been beneficial to have received a financial education at an earlier age.
Encouragingly, the same study found that 83% of Americans today said they believe it is important to talk to their children about money management, and 67% of parents are already talking to their children about their family's finances.
