Should philanthropists follow Gates’ lead in giving away their fortunes during their lifetimes?

[SINGAPORE] Bill Gates caused quite a buzz when he visited Singapore in May. He met with key government leaders, spoke at high-profile events, dined at Newton Food Centre and announced the opening of a Gates Foundation office in Singapore.

The 69-year-old co-founder of Microsoft is the foundation’s chair, and was once the world’s richest person. Earlier this year, he captured the public’s imagination when he announced that he intends to give away 99 per cent of his vast fortune over the next 20 years.

Gates wants to accelerate his giving via his foundation, with plans to end its operations in 2045.

“People will say a lot of things about me when I die, but I am determined that ‘he died rich’ will not be one of them,” Gates wrote in a blog post.

Should wealthy residents here follow Gates’ lead in giving away large chunks of their fortunes while still alive?

Perhaps it is not just multi-millionaires and billionaires who should actively give away tons of money when still alive, but also people who may have a couple of million Singapore dollars of net assets, excluding their primary place of residence.

Sure, Singapore does not have estate duty; such a tax might incentivise the wealthy to actively give away their money before they die. Nonetheless, sound reasons exist for the rich to part with much of their financial wealth when they are still alive.

Timeliness of gifts

One, the life expectancy of Singapore residents at age 65 was 21.2 years in 2024. If a rich person lives to or beyond his mid-80s and passes his fortune to his children upon his demise, the children may receive a financial windfall when they are in their late 50s or 60s.

Arguably, in the above scenario, it could be far more useful for the children to receive a huge financial gift when they are young adults, possibly when they are starting their own families in their late 20s or 30s. 

Think about how wealthy parents can help young adult children on their homeownership journeys by, say, financing down payments on residential property purchases and minimising the borrowings that their children need to take. 

Consider too how a wealthy 60-plus year-old might set aside educational funds to finance enrichment classes and higher education for his grandchildren.

In short, a wealthy person who gives his descendants financial gifts in his lifetime may give them a financial leg-up when such help is more greatly valued, rather than waiting to make such bequests after death.

Managing wealth

Two, beneficiaries may be better able to manage the receipt of various periodic financial gifts from a wealthy patriarch or matriarch, instead of a single super-large gift from the estate.

Think of lottery winners who quickly squander away a lump sum financial windfall. In contrast, family members who receive periodic financial gifts might learn how to manage money better. 

Indeed, those who plan to leave their offspring financial legacies must inculcate good financial habits among their beneficiaries.

Immersing in social causes

Three, many wealthy people may like to use much of their fortune to support charity, arts, sports or religious activities, among others.

A wealthy person might draw great satisfaction from supporting a cause financially while he is alive. After all, he can better drive where his spending goes and possibly immerse himself into the activities of the organisation that he is supporting.

Amid rising life expectancy, a retired top business leader, corporate executive, professional or government official might find deep involvement in a social cause to be hugely stimulating in one’s later years.

Family conflicts

Four, unfortunately, there are numerous instances of ugly disputes among family members over estates that can lead to families being torn apart.

For one, how a patriarch or matriarch gives away a financial fortune can lead to some family members feeling they have been unfairly treated. 

Perhaps, any injustice felt by family members who are being left out or given smaller than expected shares of a family fortune is better addressed when money is given away while the matriarch or patriarch is still alive. In such instances, the benefactor can hear feedback from unhappy family members and manage relationships with the disgruntled parties.

As an abundance of money can cause friction within families, communicating how money will be distributed among family members and dealing with feedback on such matters is critical.

Peace of mind

Five, as a person ages, his physical and mental prowess may wane. Might a wealthy old person struggling to keep up with technology become paranoid over whether his financial assets are safe from scammers and hackers?

Chances are a wealthy person could feel liberated from the need to manage complex financial affairs in his twilight years.

Indeed, a rich elderly person who need not constantly fret over whether to revise a will or jostling by family members over a financial inheritance might be better able to age with grace and peace of mind.

Certainly, having plenty of money can help one better deal with ageing, as it enables one to afford a more comfortable life, travel, access better medical care, and so on. After all, worrying about daily expenses is burdensome, especially when one is no longer economically active.

Therefore, carefully do the sums to ensure financial adequacy before working on a plan.

Building a financial fortune is hard, but giving away a fortune in an optimal manner poses challenges too.

“The man who dies thus rich dies disgraced,” wrote the late tycoon Andrew Carnegie. Perhaps the rich should emulate Gates in giving away large chunks of their money while they are still alive. Ultimately, dying rich might be a worthless epitaph.