We are sometimes reminded about the fragility of life when a high-profile person passes away before their time. This type of event rattled the public consciousness when Kobe Bryant, his daughter, and a number of others passed away suddenly in a tragic helicopter accident last year.
Another one of these situations came to light shortly after Thanksgiving when the news broke about retired Zappos CEO Tony Hsieh. He was visiting a friend in Connecticut when a fire engulfed the home, and he passed away due to complications from burns and smoke inhalation.
Hsieh was just 46 years of age, and during his relatively brief life, he was an innovator within the entrepreneurial milieu.
After graduating from Harvard, he cofounded LinkExchange in 1996. The Internet advertising cooperative was sold to Microsoft two years later for $265 million a month before his 25th birthday.
He subsequently joined forces with former Harvard student Alfred Lin to found an incubator firm that they called Venture Frogs. On one fateful day in 1999, he listened to a voicemail message that was left by Nick Swinmurn.
The caller was pitching an online shoe store, and before Hsieh could hang up on the call, his interest was piqued by a profound statistic. Swinmurn stated that footwear was a $40 billion a year industry, and the online sales channel was a largely open frontier.
Hsieh decided to back the idea, and they came up with the Zappos name as a play on the Mexican word for shoes. The total sales figure for 2000 was $1.6 million, and in 2008, Zappos reported annual revenue of $1 billion.
The following year, Amazon paid $1.2 billion for Zappos, and Tony Hsieh stayed on as the CEO. He retired on August 20, 2020, three months before his death, with a net worth of about $840 million according to Forbes.
Hsieh Reportedly Died Intestate
Hsieh was single when he died, and he did not have any children. He is survived by his two brothers and his parents, and his father and his older brother have asked the court to give them the authority to administer the estate.
They have stated that there is no will or any other estate planning document to direct postmortem asset transfers.
Though he died in the state of Connecticut, he was a resident of Las Vegas. The company moved there from San Francisco a couple of years after it was founded, and Hsieh developed a deep connection with the city.
Under the intestacy succession laws of the state of Nevada, his parents will be the sole heirs to the estate. Given the extent of his resources, he may have made some broader decisions if he would have taken the time to put an estate plan in place.
Estate Tax Implications
In addition to the fact that his true wishes may not be carried out, there is another fallout from the lack of an estate plan. The federal estate tax carries a 40 percent maximum rate, and it is applicable on the portion of an estate that exceeds the exclusion.
When Hsieh died, the exclusion was $11.48 million. Many would say this is a lot of money, but everything is relative. It is a mere drop in the bucket when you are talking about an $840 million estate.
There are estate tax efficiency strategies that can be incremented by people that are exposed, but if he did not have an estate plan, it is logical to assume that he did not address the matter.
On a positive note, there are some states in the union and have state-level estate taxes, and New York is one of them. There is no state estate tax in Nevada, but if he owned property in a state with an estate tax, that tax would potentially be applicable.
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Intestacy is simply not an option for responsible people, even if you are not a multimillionaire. If you work with our firm, we will gain an understanding of your goals and help you create a custom crafted plan that ideally suit your needs.
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