On November 27th, nine days after being pulled unconscious from a house fire in a beachfront home in New London, Connecticut, Tony Hsieh, the former CEO of the online shoe retailer Zappos, died due to complications of smoke inhalation.
Hsieh, who was single and had no children, was just 46. Although the cause of the fire is still under investigation, law enforcement ruled his death accidental.
At the time of his death, Hsieh was worth an estimated $840 million, but in spite of his immense wealth, it seems he did not have a will. While it’s not uncommon for the rich and famous to die without a will, and many iconic figures—Prince, Aretha Franklin, and most recently, Chadwick Boseman—also died without creating this basic planning document, Hsieh’s case is particularly puzzling given his altruistic nature.
Hsieh was renowned for his kindness, generosity, and always putting others first, yet by dying without a will, he left his loved ones a colossal mess to clean up. Indeed, it will likely take his family many months just to account for all of his assets, and it’s likely they will overlook—and may even never find—some of those assets.
From there, Hsieh’s estate will have to go through the court process of probate, which could last years and rack up hefty lawyer fees. And after all of his debts are settled and creditors paid, Hsieh’s family will face an enormous federal tax bill that could run into the hundreds of millions.
By all accounts, Hsieh’s death at such a young age is horribly tragic. But it’s equally tragic for such a brilliant and compassionate individual to have wasted the opportunity to do real good with the assets he created and to needlessly put his loved ones through such an ordeal.
Although it may seem harsh to lay such a judgment on Hsieh, who was reportedly suffering from mental health and substance abuse issues in the last year of his life, we do so from a place of true compassion. Indeed, we cover this case and others like it in hopes that it will inspire you to remember that death comes for us all, often when we’re least expecting it. And without any planning in place, you are forcing your loved ones to endure a costly legal process and the unnecessary loss of wealth and assets you worked so hard to build.
While the loss to Hsieh’s family, and the charitable causes he would have likely supported, will be immense, his family can afford to pay the lawyers, the court costs, and the taxes. Though you likely have a much smaller estate than Tony Hsieh, the actual cost of loss to your family, if you don’t plan, could be much higher on a relative basis.
But here’s the good news: All of this suffering can be easily avoided with planning. And you don’t have to be a multi-millionaire to create a plan that’s guaranteed to protect and provide for your loved ones no matter what happens to you.
An Internet Pioneer
Hsieh grew up in San Francisco, the son of Taiwanese immigrants and the oldest of three boys. A graduate of Harvard, where he studied computer science, Hsieh started his first company, LinkExchange, in 1996 with his college buddy Alfred Lin, who would become his close business partner.
LinkExchange was one of the first major digital advertising firms, and two years later, at age 24, Hsieh sold it to Microsoft for $265 million. After selling LinkExchange, Hsieh and Lin launched the venture capital firm, Venture Frogs, which is how he met another young entrepreneur named Nick Swinmurn, who pitched Hsieh the idea of starting an online shoe company.
That company would become Zappos, which ultimately defined Hsieh’s career and set in motion his vision for life and business. As CEO, Hsieh made it clear that Zappos was far more than just a shoe retailer: Zappos was about “delivering happiness” and “a WOW experience.” Zappos focused heavily on customer service, and famously offered customers free shipping and complete refund on all shoes for a full year after purchase, with no questions asked.
Hsieh’s leadership proved highly successful, and Zappos saw its sales go from $1.6 million in 2000 to $252 million in 2005. In 2009, Hsieh sold Zappos to Amazon for $1.2 million in stock, while staying on as the company’s CEO. Jeff Bezos was reportedly so impressed with the way Hsieh ran the company, he allowed the young entrepreneur to continue running the brand with very limited oversight.
In 2005, Hsieh moved Zappos headquarters from San Francisco to Las Vegas, where he invested $350 million of his own money to transform a once seedy part of town into a hub for arts, culture, and tech. As part of the project, Hsieh created a community of 30 Airstream trailers, where he himself lived for years with his pet alpaca named Marley.
In an interview with the Las Vegas Review-Journal, Hsieh said the community was inspired by his experience at the Burning Man festival. He described the 1-acre park as an “urban camping experience with everyone sharing the world’s largest living room, which includes a community kitchen, a firepit, and a stage.”
Hsieh’s interest in fostering community and connection with the Las Vegas project, Airstream park, and other ventures reflect the young business guru’s overarching vision—which was about more than just retail.
“He was never interested in shoes,” former Zappos executive Fred Mossler told Forbes Magazine. “Tony’s journey was to improve the human condition.”
Around the time Hsieh moved into the trailer park in 2014, he started to lose touch with many of his old friends. While many of his peers had gotten married and started families, Hsieh remained single and developed a reputation as a heavy partier.
According to a cover story on Hsieh’s life and business accomplishments in Forbes Magazine, the young entrepreneur was always a heavy drinker and known to use recreational drugs, but in later years, his drug use became more frequent. What’s more, close friends noted that Hsieh also suffered from mental health issues, including insomnia and depression.
Hsieh’s struggles with depression and substance abuse reportedly intensified in early 2020, as the quarantines from the COVID-19, which hit Las Vegas particularly hard, put an end to the parties and nonstop action the young entrepreneur craved. In January, right before the pandemic exploded, Hsieh attended the Sundance Film Festival in Park City, Utah, and fell in love with the upscale ski resort town.
Vowing to recreate his Vegas utopian community in Park City, Hsieh decided to relocate to the town, purchasing some $70 million worth of property around the area, while establishing a $30 million angel fund to help local businesses and startups. In the spring, he split his time between Vegas and Park City, but by the summer, Hsieh made Utah his new full-time residence.
Hsieh’s new home and the centerpiece of his Park City properties was a $16 million, 17,350-square-foot mansion with a private lake he called “The Ranch.” During his transition from Vegas, Hsieh reportedly promised to double the salary of friends who would agree to relocate to Park City and help him in his quest to revamp the community.
The Park City Crew
According to Forbes, at least several dozen friends took Hsieh up on his offer and moved to Utah with him, where they lived for free in some nine properties he purchased in the high-end Aspen Springs neighborhood. In Park City, Tony helped many local entrepreneurs and propped up local businesses struggling to stay afloat during the pandemic with lavish spending on restaurants, bars, limos, and concierge services.
While Hsieh initially relocated to Park City to focus on “health, wellness and rehabilitation,” by the late summer, friends and family reportedly became concerned with his increased drinking and drug use. Longtime friends found it hard to reach Hsieh, who grew increasingly isolated, surrounding himself with a new group of younger friends, most of whom were on his payroll.
According to Hsieh’s close friends and colleagues who spoke with Forbes, Tony’s new entourage of friends, he dubbed, “The Park City Crew,” were encouraging him to indulge in more frequent drug use, which his old friends felt was getting out of control. At the same time, he grew more isolated and even paranoid, and at one point, a team of security guards Hsieh hired basically barricaded sections of his main house, “blocking anyone who didn’t have Tony’s permission to enter,” according to Forbes.
In August, it was announced that Hsieh was retiring from Zappos after more than two decades at the helm. Although the timing of his retirement was suspect, Amazon denied pushing Hsieh out, and insisted that stepping down was his own decision, according to Forbes. Whatever the case may be, his friends and loved ones became so worried about his condition, they staged several interventions in order to convince him to seek help.
Apparently, the interventions worked. Hsieh was reportedly planning to check himself into a rehab facility shortly after a planned visit to see friends and family in Connecticut for the Thanksgiving holiday. But as we now know, Hsieh’s plans to turn his life around were tragically interrupted.
A Double Life
Hsieh outlined this mission in the 2010 book, Delivering Happiness: A Path To Profits, Passion and Purpose, which became a New York Times number-one bestseller. Yet while the young entrepreneur was busy bringing joy to his customers, employees, and friends, Hsieh was privately coping with mental health issues and substance abuse. These struggles reportedly intensified in 2020, as the pandemic-related quarantines put an end to the non-stop parties and socializing Hsieh came to crave.
Hsieh’s downward spiral also coincided with his relocation from Las Vegas to Park City, Utah. In Park City, Hsieh became further isolated from longtime friends, surrounding himself with a new group of friends, many of whom were reportedly much younger than Hsieh and encouraged his escalating use of drugs, including ketamine, ecstasy, and nitrous oxide.
Friends With Benefits
Further complicating matters was the fact that many of Hsieh’s new friends had moved to Park City after Hsieh promised to double their highest salary if they would relocate with him and assist with his efforts to revitalize the downtown area of the ski-resort town.
The Wall Street Journal reported that the walls of Hsieh’s Park City mansion were covered in thousands of color-coded sticky notes, which Hsieh used to record financial commitments he made to employees, friends, and local businesses. What’s more, Hsieh reportedly purchased dozens of properties in Park City, including homes, condos, and businesses, all of which were owned through a number of limited liability companies (LLCs).
In August, Hsieh announced that he was retiring as CEO of Zappos, which he had run largely autonomously for more than a decade after selling the company to Amazon in 2009. Around that same time, family members and friends worried about Hsieh’s increased drinking and drug use, reportedly staged multiple interventions in an attempt to get him professional help.
Although reluctant at first, Hsieh eventually decided he would seek treatment for his addictions. According to the Wall Street Journal, Hsieh was going to check himself into a rehab facility in Hawaii following the Thanksgiving holiday, which he planned to spend with his girlfriend in Connecticut. Sadly, Hsieh would never make it to Hawaii, as he perished from injuries he suffered after being pulled unconscious from a house fire in the early morning hours of November 18th.
A Life Cut Short
During his visit to Connecticut, Hsieh stayed in a waterfront home in New London, with his longtime girlfriend and former Zappos executive, Rachael Brown, as well as his brother, Andy Hsieh. According to property records, Hsieh purchased the $1.3 million home for Brown in August 2020, but it was a likely vacation home, as Brown reportedly lived with Hsieh in Park City, according to the Las Vegas Review Journal.
It remains unclear what started the fire. Based on reports from the Wall Street Journal, at some point in the evening, Hsieh told others in the house that he was going to a storage shed that was attached to the home, and that they should check on him regularly throughout the night. From there, Hsieh apparently locked himself—either intentionally or by accident—in the storage room and wasn’t seen or heard from again.
When firefighters arrived on the scene around 3:30 am, they found smoke billowing from the storage area at the back of the house where Hsieh was located. The others staying in the house told first responders Hsieh was locked inside the shed and was not responding to their pleas for him to come out. Firefighters were forced to break through the door into the storage area, where they found Hsieh lying unconscious.
Paramedics performed CPR on Hsieh at the scene, and then he was flown to a local hospital, before being relocated to the Bridgeport Hospital Burn Center, where he ultimately died nine days later on November 27th—just two weeks before his 47th birthday. Because the investigation into the fire is still ongoing, local authorities are not releasing any information about the suspected cause of the fire, but they maintain Hsieh’s death was accidental and caused by complications from smoke inhalation.
Cleaning Up the Mess
Hsieh is survived by two brothers and his parents. Just a week after his death in early December, a judge in Clark County, Nevada, granted a motion filed by Hsieh’s father, Richard, and his older brother, Andrew, to be named co-special administrators and legal representatives for his estate. In the ruling, the judge ruled that Hsieh’s personal and business affairs “require immediate attention to prevent loss to the estate.”
According to court reports, Hsieh’s family was unclear whether or not he had a will or any other planning documents. His father and brother sought to be named administrators of his estate, so they could access his safety deposit boxes and speak with his lawyers and other associates in order to determine if he had made any plans for how his assets should be managed upon his death.
Although Hsieh had moved to Park City earlier in the year, he was still listed as a resident of Nevada. This means that if no will is found, all $840 million of Hsieh’s assets will be distributed under Nevada’s intestate succession laws. According to those laws, Hsieh’s mother and father stand to inherit his entire estate.
However, before any of his assets can be transferred, they must first be located. Given the immense size and scope of the assets Hsieh likely accumulated over his lifetime, just identifying everything he owned will likely take his loved ones several months or even years. Depending on the type of records Hsieh kept, it’s quite likely that some of his assets will never be located, and instead of passing to his family or funding one of Hsieh’s favorite philanthropic causes, those assets will end up in the state Department of Unclaimed Property.
In addition to locating his assets, Hsieh’s family must also pay off any debts or liabilities Hsieh incurred during his lifetime. And this process will undoubtedly be extremely complicated due to his penchant for doubling his friends’ salaries in exchange for relocating to Park City with him.
Each one of the thousands of sticky notes covering the walls of Hsieh’s mansion in Park City could potentially be considered a valid contract, and if so, each of those individuals could have a claim against his estate. To complicate matters even more, it’s highly likely that there will be questions as to whether Hsieh was in a sound state of mind during his final months and if he had the mental capacity to even make binding contracts.
Hsieh’s failure to use formal legal agreements to govern his business relationships will undoubtedly lead to bitter court battles, pitting his family against some of the so-called “friends” Hsieh surrounded himself with during his final months.
Furthermore, Hsieh’s recent spending spree on real estate and businesses in Park City, much of it done through multiple LLCs, will also need to be sorted through. This will be a particularly lengthy and expensive process given that his loved ones must deal with the court process of probate not only in Hsieh’s home state of Nevada, but in every state he owned property in.
Finally, once all of Hsieh’s debts and creditors have been paid via probate, whatever remains of the estate will be subject to the federal estate tax before it can pass to his parents. The estate tax is not a factor for most people, as the tax code provides for a hefty exclusion that can be used to transfer a certain amount of wealth tax free to your heirs upon your death.
Yet given Hsieh’s massive fortune, his family will be hit with a tax bill that could potentially run in the hundreds of millions. Based on the federal estate tax exclusion for 2021, the first $11.7 million of Hsieh’s estate will pass tax-free to his family, but whatever remains of his $840 million estate after probate will be taxed at a whopping 40% rate.
A Sad Lesson
The saddest part of this whole situation is that virtually all of the time, money, and stress Hsieh’s family is now forced to endure could have been easily prevented with proper planning. And given his immense wealth, it’s virtually unthinkable that Hsieh didn’t have a team of experienced lawyers and financial advisors pushing him to create at least a minimal level of planning.
Using living trusts, for example, Hsieh could have ensured that all of his assets would pass immediately to the beneficiaries of his choosing upon his death, without the need for probate. At the same time, trusts could also have been set up to mitigate some of Hsieh potential estate tax liability, as well as ensure that some of his wealth went to the numerous charitable and philanthropic causes that were near and dear to Hsieh’s heart.
In addition to creating planning vehicles to ensure the proper distribution of his assets, Hsieh also should have created an updated inventory of all his assets. Such an inventory not only makes creating your estate plan much easier, but most importantly, it allows your loved ones to know what you have, where it is, and how to access it if something happens to you.
With us as your Personal Family Lawyer®, we will not only help you create a comprehensive asset inventory, we’ll make sure it stays regularly updated throughout your lifetime.
A Wake-Up Call
Following Hsieh’s death, his family released a statement to the press that read in part, “The Hsieh family hopes to carry on Tony’s legacy by spreading the tenets he lived by—finding joy through meaningful life experience, inspiring and helping others, and most of all, delivering happiness.”
While Hsieh’s sudden death is certainly tragic, hopefully it serves as a wake-up call, reminding us all that we never truly know how much time we have left or when the end will come. To honor Hsieh’s legacy and deliver happiness to those you love most, meet with us to put your plan in place today.
Whether you already have a plan created or nothing at all, we’ll find the specific planning strategies best suited for your life situation and asset profile. With us as your Personal Family Lawyer®, you’ll have access to the same planning tools those in the Fortune 500 use, which are designed to keep your family out of court or conflict no matter what happens. Contact us today to get started.
This article is a service of Stafford Law Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.