Florida Elder Law & Estate Planning Blog


What Happens If You Die Without An Estate Plan? The Family of Zappos Founder Anthony Hsieh Is Finding Out

December 20, 2020
Tony Hsieh of

Tony Hsieh, founder of online shoe retailer Zappos, died the day after Thanksgiving at age 46. He died without an estate plan.  His life, marked by enormous business success and wealth, was marred by drug addiction and mental illness. His untimely death provides us “regular” people with another high-profile example of what happens when family is left to navigate a deceased loved one’s affairs without an estate plan to guide them.

Before we discuss his death, let’s look briefly at Hsieh’s extraordinary life.

A Tech Wunderkind, With Issues

A Harvard grad, Hsieh co-founded Zappos in 1999, serving as CEO for 20 years. In 2009, Amazon bought Zappos for $1.2 billion.  An entrepreneurial wunderkind, he authored the 2010 bestseller, Delivering Happiness: A Path To Profits, Passion and Purpose.

Happiness was apparently number one on Hsieh’s radar. In August 2020 Hsieh abruptly pulled up stakes from his Las Vegas residence and moved to Park City, Utah. There, he bought $70 million in houses and condos, inviting his friends to move near him just to be “happy” – and offering them double their top salary to do it. He was known to be extraordinarily generous and was referred to as the “caboose,” because everyone else came first.

Despite his enormous social circle, Hsieh was chronically lonely, friends told Forbes. COVID restrictions made matters worse.  (This sounds very much like what happened to Steve Bing, as we explained in a prior post.) Hsieh was a longtime alcohol abuser. “Grey Goose vodka is his best friend,” one associate told the Daily Mail. Others say he abused nitrous oxide, ketamine, ecstasy, and psychedelics. He also seemed fascinated by fire, with candles constantly burning at his mansion and parties featuring flamethrowers. Friends and family had tried interventions in recent months. They made 911 calls when his behavior seemed dangerous. In June 2020, one call resulted in Hsieh’s hospitalization.

Dying Intestate, Dying Disorganized

According to the Wall Street Journal, prior to his death Hsieh was planning to check into a rehab facility. But in November, while he was in a storage area of a friend’s property in Connecticut, the structure caught fire. Hsieh was unresponsive when he was extricated, but subsequently died of smoke inhalation, on Nov. 27. Authorities have ruled it an accident, but are still investigating. Some reports suggest the storage area had been barricaded – from the inside.

Forbes estimates Hsieh’s estate, conservatively, at $700 million. However, with all his properties and business interests, it may go as high as $1 billion.

Since Hsieh had no estate plan and named no one to administer his estate, on December 3 the Clark County, Nevada probate court granted his father Richard and brother Andrew the authority to represent the estate. As co-special administrators, they now have the job of figuring out the extent of Hsieh’s assets, their value, his debts, and must report their findings to the court. You can read the court order here.

Their job will be a monumental one. Thousands of color-coded sticky notes have been found affixed to the walls of Hsieh’s home, perhaps documenting contracts and other commitments to businesses,  employees, friends. Whether those sticky notes are valid contracts of any sort, no one can say at present. The properties in Utah are owned by many LLC’s and are occupied by Hsieh’s friends.

Hsieh Needed An Estate Plan. Why You Need One, Too

No one relishes thinking about their own mortality. That may well explain why so many Americans procrastinate about doing their estate plan. Or never do it.  It won’t matter when I’m dead, so why bother? they may say. Here’s the answer:  of course it won’t matter to you. To those you leave behind, it will matter a great deal. As Hsieh’s story shows, without good planning you could be leaving your loved ones a mess, and/or letting your assets fall into the wrong hands.  Knowing that could happen doesn’t bode well if you want peace of mind while you’re alive!

Once Hsieh’s assets are  identified, those that are not beneficiary-designated or co-owned will be distributed according to Nevada intestacy laws. Since he was single, that means that his mother and father will get his assets. Whether this is what Hsieh would have wanted is unknowable. Similarly, if you are a Florida resident and pass away without a written plan, Florida intestacy laws will govern who gets what. Here are a few example of what can go awry when these important decisions are left up to the state:

The Wrong People May Get Your Assets

There are numerous examples of a decedent’s assets falling into the wrong hands. Here are two examples that we have seen in our law practice:

You are a single adult and have no children. Both your parents are alive, but you have never had any contact of consequence, by choice, with your father. If you die without a plan, under Florida law half of your probatable assets will go to him.

You are married and have no children with your current spouse. You have children from a prior marriage from whom you are estranged and you do not wish them to inherit anything from you.  If you predecease your spouse and die intestate, your children will get half of your probatable assets, and your spouse, the other half.

Your Family Will Have To Deal With Probate Court

Many Floridians rely on a properly drafted and funded living trust or on certain beneficiary designations in order to spare their loved ones the hassle and various fees of probate, and to keep their distributions private. If you die without a plan that includes probate avoidance strategies, your assets that do not have beneficiary designations or co-owners will go through probate.

Your Estate May Be Subject To Unnecessary Taxes

As we indicated in a recent post, a reduction in the estate tax exemption is slated for 2026, but may occur even sooner. If your current non-taxable estate becomes taxable and you haven’t made a plan incorporating appropriate tax strategies, the IRS could gobble up more and leave less for your loved ones.

No Plan Makes It Easier For Someone To Successfully Make A Claim On Your Estate

Given Hsieh’s great wealth and huge circle of friends and hangers-on, it would be no surprise if people start coming forward with claims on the estate. Are there people who might feel entitled to a piece of your estate – who you’d prefer not to get anything? The best protection against such claims is a well-drafted estate plan.

Lack Of Planning Could Foster Family Conflict

One of the major issues our attorneys discuss with clients is how their bequests will impact on their children’s relationships. If you pass away with no spouse in the picture, your children will share equally in your assets. As we have noted in a prior post, equal is not always fair. For example, do you have a child who is struggling financially who has been taking care of you, and a wealthy child that never lifts a finger? How would the struggling child feel if the State of Florida entitled both of them to an equal inheritance? How would you feel while you are alive, knowing this will occur after your are gone?

Your Loved Ones Could Be Harmed If They Receive An Inheritance From You

Do you have a spouse receiving Florida Medicaid benefits, or a disabled child receiving other federal benefits? If Florida intestacy law applies and they end up with a direct, lump sum bequest from your estate, their benefits could be terminated.

 

As you can see, dying without a plan is, well, a bit of a misnomer. Whether you are a multi-millionaire like Anthony Hsieh or just a regular person who dies without an estate plan, there IS a plan for your estate: It’s written by the state. Contact The Karp Law Firm for help putting YOUR plan in place. Email us at klf@karplaw.com or call (561) 625-1100.