Advisors were likely powerless to push for an $800 million estate plan as Zappos founder started to drift into unhealthy habits. Now the family has to sort it out.
Tony Hsieh never quite made “billionaire” status but it’s a fine line between selling several companies for an $800 million personal payday and ringing the Wall Street bell yourself.
Leaving that much cash behind is still impressive. The heirs only need to park it in Treasury bonds and they’re set for perpetuity.
But when you die on a reported girlfriend’s property at age 46, thousands of miles from home and without a will, the estate gets a lot more complicated than it needs to be.
It would have been worth it for Hsieh’s bankers to push an estate plan on their Silicon Valley customer and keep nagging him until he filled out the questionnaire. With this much money at stake, it’s practically malpractice.
The final fire
Hsieh cashed his first startup in 1998 and graduated into the world of top-tier technology incubators, ultimately founding shoe retailer Zappos. He sold it to Amazon in 2009 and ran it until retiring in August.
He didn’t have to work but enjoyed the structure. He also enjoyed pushing his health to the limit, experimenting with extreme diets, holding his breath and playing with fire.
In that light, his asphyxiation in a Connecticut shed feels almost foreordained. Something caught fire and while he made it to the hospital, the doctors couldn’t save him.
Presumably his advisors weren’t aware of his extracurricular pursuits. That’s all right. It isn’t their job to keep tabs on even the most UHNW clients or get in the way of their lifestyle.
However, clients who live longer tend to be better for business. We can’t meddle, but we can nudge.
Ironically enough, trust officers tend to be best at this because they work directly with beneficiaries and can often weigh the spending patterns for themselves. If something looks unsustainable, the trustees get notified.
Hsieh, on the other hand, seemed untethered. That’s all right. It was his life and his money.
But now that he’s gone, his money becomes a problem. No spouse and no will mean his scattered assets need to be accounted for and then dispersed.
His father and brother have stepped up to sort everything out. It’s going to take time and money to find all the money, and there aren’t any guarantees. Things often fall through the cracks.
The tax situation is also unsettled. At $800 million, the IRS stands to gain a windfall here.
No trust means probate is a concern, and with a Nevada base of operations, Utah residence and presumptive California executors, probate can get messy.
The lesson here is clear. Every client needs an estate plan. It’s how we add multigenerational value, keeping family fortunes growing instead of spending down to zero.
Once the paperwork is in place, the clients can do what they want. It’s that simple.