Buffett Announces Estate Plans Suddenly
On November 25th, Berkshire Hathaway Inc. announced that Warren Buffett converted 1,600 Class A shares of Berkshire into 2.4 million Class B shares and donated these shares to four family foundations.
According to Berkshire's statement, Buffett will donate 1.5 million Class B shares to the Susan Thompson Buffett Foundation, while the Sherwood Foundation, Howard G. Buffett Foundation, and NoVo Foundation will each receive 300,000 Class B shares.
Based on last Friday's closing price, Berkshire Hathaway's Class B shares were valued at $476.57, making the total value of the donation approximately $1.143 billion.
In the statement, Buffett indicated that after this donation, his holdings of Berkshire Hathaway Class A shares would be reduced to 206,363 shares (approximately $147.4 billion), a 56.6% decrease since his 2006 commitment. Buffett mentioned that in 2004, before the passing of his first wife, Susie, they jointly owned 508,998 Class A shares. Buffett stated that upon his death, his children would be fully responsible for gradually distributing all of his Berkshire shares, which currently account for 99.5% of his wealth.
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In a rare interview with The Wall Street Journal in June of this year, Buffett disclosed his latest estate arrangements.
Buffett stated that he has amended his will multiple times and has formulated the current plan after witnessing his children's maturation.
In the latest arrangement, Buffett will donate all remaining wealth after his death to a newly established charitable trust fund, which will be jointly supervised by his daughter, Susan Buffett, and his two sons, Howard Buffett and Peter Buffett. The three must unanimously decide how the money in this foundation should be used.
Regarding his children, Buffett advised his son, Howard, "Consider undertaking significant projects with your siblings. Focus on your hometown community but with a broader perspective. Judge based on the alignment of the project with your goals and its chances of success, not on the person making the request. I expect you will make some mistakes, but if you only make 'safe' decisions, then nothing significant will be accomplished."
Furthermore, in the latest interview, Buffett clearly stated that after his death, no more money will go to the Gates Foundation. According to the Gates Foundation's statistics, from 2006 to 2023, Buffett donated $39.3 billion to the foundation.
Buffett's three children, Susan, Howard, and Peter, all expressed their outlook on the future when interviewed. Susan stated that they have not discussed specific plans but may continue what they have been doing. Howard emphasized that they may face a considerable workload. Peter mentioned that the final decision may be influenced by various factors.
At that time, Buffett also stated that every July, he would donate 5% of the designated share balance directly to these charitable intermediaries.
Buffett has publicly pledged to donate 99% of his wealth to charity during his lifetime or at the time of his death and has been fulfilling this promise. Since 2006, he has donated half of his Berkshire holdings, primarily to the Gates Foundation and the four foundations associated with the Buffett family.
On November 2nd, local time, Berkshire released its financial report for the third quarter of 2024. The report shows that Berkshire net sold approximately $36.1 billion in stocks in the third quarter, including about 100 million shares of Apple and several hundred million dollars worth of Bank of America stocks, marking the eighth consecutive quarter of net stock sales for Berkshire. Among them, Berkshire's reduction in Apple stocks is the most eye-catching, following a nearly 50% reduction in the second quarter, it was reduced by another 25% in the third quarter. Although Apple remains its largest holding, it has plummeted from 905 million shares at the beginning of the year to 300 million shares, with the holding value also dropping from $174.3 billion to $69.9 billion.
This billionaire investor did not only sell Apple stocks. In the third quarter, Berkshire also reduced its holdings in Bank of America stocks. What caught the market's attention even more was that Berkshire suspended repurchasing its stocks for the first time since 2018 this quarter.
Under the continuous selling, Berkshire's cash reserves have soared to a historical high of $325.2 billion, a significant increase from $168 billion at the beginning of the year. Known as the "Oracle of Omaha," Buffett's astonishing speed in selling stocks seems to imply his concerns about the U.S. stock market.