When they created the Giving Pledge, Bill Gates and Warren Buffet received a lot of praise and publicity. Billionaires who have joined the pledge have received the same. It might surprise you that the pledge is non-binding and unenforceable. However, there are good reasons for that.
The Giving Pledge started with a simple idea: the incredibly wealthy should give their wealth to charitable causes instead of hoarding it in their families. Bill Gates and Warren Buffet created a document that billionaires could sign.
By doing so, the billionaires were pledging to give away at least half of their wealth either during their lifetimes or in their estate plans.
To date, nearly 200 billionaires have signed up and as a result received publicity and invitations to exclusive events.
As Bloomberg reports, however, in a recent article titled “Pledge Aside, Dead Billionaires Don’t Have to Give Away Half Their Fortune,” the language of the pledge states that it is non-binding.
There are actually good reasons for making the pledge non-binding.
The first is that if someone does not go through with the pledge, no one can sue the estate in an attempt to enforce the pledge. This is important because of the second good reason to make the pledge non-binding, which is that it is very difficult to determine what half of a billionaire’s fortune actually is.
For example, if someone has precisely one billion dollars, you might think that half is $500 million. In reality, it is $300 million because 40% of the estate will go to pay estate taxes meaning that the estate is really only $600 million not $1 billion.
If you are a billionaire, be sure to consult your estate planning attorney before signing this or any other such pledge. Schedule a complimentary consultation at www.ssslegalconsultancy.com.
Reference: Bloomberg (June 3, 2015) “Pledge Aside, Dead Billionaires Don’t Have to Give Away Half Their Fortune”
Published on: 06-Jun 18, 2015