Warren Buffett’s longtime deputy showed that rising to the top isn’t everything
3 min
Charlie Munger was Robin to Warren Buffett’s Batman, a business equivalent of the Edge rocking with the Bono of investing.
Munger, who died Tuesday at age 99, played one of the toughest roles in the corporate (or any) world: No. 2.
Succeeding as second in command takes a rare blend of confidence and humility, say people who’ve done it. The consummate right-hand person must be devoted to organisational success while accepting that someone else’s star will always shine brighter.
At a time when many American workers are reconsidering whether the race to the top is worth running at all, Munger’s apparent satisfaction with being the ultimate sidekick could be a model.
It helped that Warren and Charlie, as the duo was known, shared a personal friendship. And being a wingman is presumably more fun when you’re a billionaire, as Munger was. Most important, say those who knew him: Munger knew he was respected and appreciated.
Buffett made sure of it.
Harry Kraemer, former chief executive of the healthcare company Baxter International, recalls a conversation with Buffett at a CEO gathering around the year 2000: “I said, ‘Boy, you’ve got an amazing track record.’ And he goes, ‘It isn’t just me. Never mention my name without Charlie’s.’”
In a recent annual letter, Buffett wrote: “I never have a phone call with Charlie without learning something.”
There aren’t many pairs like Buffett and Munger. An analog might be the late Canadian telecom mogul Ted Rogers and his longtime lieutenant, Phil Lind, who died in August at age 80. Robert Brehl, who co-wrote Lind’s 2018 memoir, “Right Hand Man,” says loyalty is essential to a relationship like Rogers-Lind or Buffett-Munger.
Having complementary strengths and interests helps ward off resentment, Brehl adds.
“You have to have the yin and yang,” he says. “Ted wouldn’t have been as effective without Phil, and the same thing with Warren and Charlie.”
Before meeting Buffett, Munger was already a professional success. He served in World War II, went to Harvard Law School and co-founded a law firm, Munger, Tolles & Olson, where his name was first on the door.
Even though his results as an investor were strong, over time, he realised he could be more successful—and happier—in a partnership. Understanding his own shortcomings contributed to his willingness to become Buffett’s running mate, he has said. He rejected Buffett’s initial overtures before agreeing to come aboard.
“It took me a long time to wise up that [Buffett] had a better way of making a living than I did,” Munger told CNBC in 2021. “But he finally convinced me that I was wasting my time.”
Not that it was easy to set aside his ego to take the No. 2 role and play to what his No. 1 needed. Buffett was Berkshire Hathaway’s public face and larger-than-life persona. Munger seemed to relish his freedom from talking to reporters and investors. In the background, he could be sharper, more direct and funnier.
The durability of the Buffett-and-Munger duo act stemmed, in part, from a shared intellectual curiosity, a measure of humility—for billionaires, anyway—and willingness to learn from their mistakes.
“I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines,” Munger said in his commencement address to the University of Southern California’s law school in 2007. “They go to bed every night a little wiser than they were when they got up and, boy, does that help, particularly when you have a long run ahead of you.”
Savvy runners also know it can be best to let someone else take the lead to break the wind. A certain type of person prefers to run second, says social psychologist Tessa West, who is studying people she calls “runners up” for a forthcoming book.
“Once you get to a certain level of power, you realize that that top position doesn’t necessarily come with more influence—it just comes with more publicity and a lot more reputational risk,” she says. “The way I see it, Munger got to have his cake and eat it too. He had status without all the headaches.”
He also had a life outside of Berkshire and Buffett. One of Munger’s pet projects was a quest to design the perfect college dormitory.
He’ll be remembered as the consummate consigliere, but that wasn’t his whole identity.
—Geoffrey Rogow contributed to this article.
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Strong family financial planning can help reduce taxes and support younger generations. From intrafamily loans and asset gifts to inheritance disclaimers, strategic cooperation can create meaningful financial benefits—when families have the trust and structure to make it work.
4 min
Happy is the family whose members—parents, grandparents and grown children—trust each other enough to cooperate on shared goals, especially financial ones. When that is truly the case, Uncle Sam’s tax rules can help as well.
This matters especially now that mortgage rates are above 7%, and many families are looking for ways to help younger members. If the elders have resources and are confident younger ones can cooperate, a family loan could make homeownership possible while providing the elders with a useful income stream.
Other strategies can actually lower taxes, such as when funding 529 plans or Roth IRAs, or when someone inherits a traditional IRA with required withdrawals larger than they will need.
Here are three strategies useful for functional families.
It is perfectly legal for families to lend money to a relative for a down payment or even a private mortgage.
But it is important not to cut corners, says Ryan McKeown, a CPA with Modern Wealth Enhancement in Minnesota. If the loan is for a down payment, be honest with the mortgage provider and have a formal agreement. The lender owes tax on the interest payments received.
If the loan is for a private mortgage, both sides should have legal representation with a formal written agreement, including payment terms. The lender owes tax on the interest, and the borrower often can deduct it if he or she itemizes.
To avoid IRS trouble, the interest rate shouldn’t be lower than the agency’s Applicable Federal Rate at the time of the loan. Currently that is about 5% for loans longer than nine years; about 4.5% for loans three to nine years; and about 4% for loans three years or less. Currently, traditional mortgage rates are generally above 7%.
In addition, the lender could use the $19,000 annual gift-tax exemption (described below) to forgive some or all of the interest or principal annually. If both lenders and borrowers are married, that is up to $76,000 a year. There is no tax for the borrower on such forgiveness, because it is from a gift.
If you’re going this route, McKeown advises against having a fixed plan to forgive the debt. Instead, do it in one-off letters specifying the amount—and keep careful records. Otherwise the IRS might try to treat the loan as a taxable gift.
Powerful tax-saving moves for families often use gift-tax provisions. Under current law, anyone can give anyone else up to $19,000 of assets annually, free of gift tax. That means a married couple with three grandchildren could give them a total of $114,000 in 2026.
The gifts can be cash or other assets, like stock. For noncash gifts, the cost basis—which is the starting point for measuring taxable gain after a sale—“carries over” to the recipient. So if someone buys $1,000 of stock and gives it away when it is worth $5,000, the recipient’s cost basis is $1,000. If the recipient later sells the shares for $8,000, the taxable gain is $7,000.
Here’s an example showing how gifts could save a family taxes. Grandma is a widow of modest means, while her child and spouse have prospered. The couple has two children, and they want to contribute $5,000 to a 529 college-savings plan for each—but they need to sell stock to do it. Their tax rate on the sale would be 18.8%, and they would need to sell about $11,000 of stock.
However, Grandma’s federal tax rate on the stock sale is 0%. If the couple gives $10,000 of shares to Grandma, she could sell them, pay no tax, and fund the grandchildren’s 529 plans. This saves about $1,000 of tax.
These moves are legal, and they could be used in other ways, such as to help a young person fund a Roth IRA.
But trust among family members is essential: Under the law, givers can’t put conditions on a gift. Grandma could use her stock proceeds to take a cruise, but she makes 529 contributions instead.
Mark Sellner, a retired tax attorney and CPA living in Sarasota, Fla., uses this strategy. His children sell stock he gives them and fund 529 plans for his grandchildren.
The family’s tax savings aren’t huge, but he likes other benefits. The sales by his children don’t boost his adjusted gross income, which in turn could raise his Medicare Irmaa premiums or his 3.8% surtax on net investment income.
Sellner doesn’t worry about his children using the funds for another purpose.
“There can’t be any strings attached to gifts. Of course, it is up to us to decide whether to make them in the future,” he says.
Two caveats: The “kiddie tax” applies to most children under age 24, and it is levied at the parents’ rate on investment income above $2,700 in 2026. Consider this before making gifts to a young person.
Investors who give away stock also forgo the step-up, an important provision that exempts assets held at death from capital-gains tax.
Sellner knows he’s losing a step-up, but says, “The children could use a little more now. Why should they wait 20 years to get it?”
A disclaimer is a highly useful strategy in which one heir renounces an inheritance in favor of another heir. Assuming family members cooperate, this can save taxes.
Here’s one example. Dad died and had a large traditional IRA that he left to Mom. She has enough assets and income to cover her expenses, and she lives in a state with a stiff estate tax. The inherited IRA would put her estate over the threshold.
Also surviving are three young-adult children. If Mom disclaims all or part of Dad’s IRA within nine months of his death, that amount could go directly to the children. They will have 10 years to empty the account, and the family as a whole will likely save estate and income taxes.
Disclaimers have many key details, especially regarding beneficiary documents. Although heirs have great freedom in choosing what assets to disclaim, the rules about who gets disclaimed property are rigid. It is best if the original owner names tiers of heirs so that if one disclaims, the next recipient is clear.
