Tony Hsieh was staying in a house that was owned by a friend in New London when it caught fire on November 18. He suffered from smoke inhalation and burn injuries, and he passed away nine days later.
He had a remarkable run as a businessman that started when he cofounded LinkExchange in 1996 when he was just 22 years of age. Two years later, the partners sold the business to Microsoft for the sum of $265 million.
Hsieh used the capital to launch a startup funding firm called Venture Frogs. One day he started listening to a voice mail that was left by a guy that wanted to open an online shoe store. He was about to delete it, but he stopped when the caller highlighted the size of the footwear market.
The person on the other end of the phone was another young visionary named Nick Swinmurn, and he convinced Hsieh to back the company we now know as Zappos. Tony Hsieh joined the company as CEO a couple months after he put up the funds.
Between 2000 and 2009, annual sales totals went from $1.6 million to $1 billion. At that point, Amazon purchased Zappos, but Hsieh stayed on as the CEO.
He retired on August 24th, just three months before the tragic incident.
No Will or Trust
Tony Hsieh is survived by his parents and his two younger brothers. His father and one of his brothers have asked the court to allow them to act as the administrators. They have stated that they believe that the deceased entrepreneur died intestate.
He was a resident of Las Vegas, so when everything is sorted out, his assets will be distributed under the intestate succession laws of Nevada. Hsieh was not married, and he had no children, so his parents would be his heirs under the succession statutes.
His net worth was $840 million according to Forbes, so it will be challenging to identify and inventory all of his assets. No one will ever know if he would have decided to spread his wealth in a different manner.
Estate Tax Implications
The fact that his true wishes will never be known is one of the consequences, but there is another one that is quite profound.
There is an exclusion that can be used to transfer a certain amount tax-free before the federal estate tax would be applicable on the remainder. In 2020, the exclusion is $11.58 million, and the maximum rate of the tax is 40 percent.
Without question, $11.58 million is no small sum, but everything is relative. When you are talking about an estate that is valued at $840 million, it is a drop in the bucket.
We have a state level estate tax in Connecticut, and the exclusion has been $5.1 million in 2020. Though Hsieh died in Connecticut, he was a resident of Nevada, and there is no state level estate tax in Nevada.
However, if he owned property in a state that that has an estate tax, the tax in that state could be a factor.
The estate tax is a fact of life that high net worth individuals have to live with, but there are strategies that can be implemented to ease the burden. According to his family, he had no estate plan, so it is logical to assume that he did not do anything to mitigate his transfer tax exposure.
Action Is Required
As you can see, a great deal can be lost if you ignore this important responsibility. Even if you don’t have to worry about estate taxes, you should work with an attorney to put a custom crafted plan in place.
We would be more than glad to gain an understanding of your situation and apprise you of your options. When you make your decisions, we can apply our expertise to develop a plan that is ideal for you and your family.
If you are ready to get started, you can schedule a consultation appointment if you give us a call at 860-548-1000, and there is a contact form on this site you can use to send us a message.
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