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  • Writer's pictureJenny Rozelle, Host of Legal Tea

Celebrity Estate Planning - Tony Hsieh (From Zappos) - Episode 35

Hey there, Legal Tea Listeners! This is your host, Jenny Rozelle. We’re back to “estate planning of the rich and famous” where we chat about celebrities and their estate planning. Today’s episode is on Tony Hsieh (pronounced Shay). You may or may not immediately recognize Tony’s name – he was most known for being the CEO of the online shoe/clothing store, Zappos, and we’ll get into his other ventures here in a few. Let’s dive into Tony, personally, before we dive into his estate following his passing.

According to his Wikipedia page, Tony was born in Illinois (shout out to the Midwest), but he and his family, which included his father, mother, and 2 siblings, moved to California when Tony was 5 years old. Tony attended Harvard University for computer science and graduated in 1995. The following year, in 1996, he co-founded a company called LinkExchange. Just two years later, LinkExchange was sold to Microsoft for a whopping $265M. Whoa!

In 1999, a friend of Tony, Nick Swinmum, approached Tony and another friend of theirs about selling shoes online. A mere two months later, Tony joined Zappos as the CEO and Zappos kicked things off in 2000 with $1.6M in total sales. Nine years later, in 2009, Zappos’ revenue got to $1B. Billion with a “B.” In mid-2009, Zappos was acquired by Amazon for approximately $1.2B. Supposedly, Tony made around $214M from the acquisition. Even though the acquisition happened, Tony stayed on board as the CEO and retired in August 2020 after 21 years.

There were a few other ventures that Tony went on post-Zappos, including selling/investing in real estate (in Nevada, in Utah, etc.), but the point in all this – is he sure was quite a successful businessman!

In late-2020, still according to Tony’s Wikipedia page, Tony was involved in a house fire that occurred at/around 3:30 AM in Connecticut while visiting family. After Tony was discovered, he was transported to a hospital where he later succumbed to his injuries and passed away on November 27, 2020. If you’re keeping everything straight, you’ll realize this came a mere 3 months following his retirement from Zappos. According to Las Vegas Review Journal, the local Fire Marshal shared that there was “physical evidence to lead investigators to theorize that Hsieh could have been impaired or intoxicated at the time of the fire.”

There is much talk following Tony’s passing about his mental health. Much of the Court records showcase this – if you take 5 minutes and start looking into Tony’s estate case, Tony personally, and what he was doing in the years leading up to his passing … you’ll see what I’m talking about. According to the Las Vegas Review Journal, another real estate investor explained that Tony’s behavior was considered to be known by many, but that its extent was a “little surprising.” Because mental health is NOT talked about enough, I think it’s important to shine some light on it. I’m going to read how the Las Vegas Review Journal begins their article:

“Tony Hsieh needed help. The Las Vegas tech mogul’s drug use, delusional thinking and erratic behavior has prompted longtime friends to arrange a trip from his new outpost in Utah to a Montana ranch, where prior visits had proved helpful. When it came time to leave, Hsieh boarded the bus wearing only pajama pants and brought only a box of crayons.

He offered a friend $1M to be his alarm clock the next morning, and as the bus arrived in Montana, Hsieh thought a gunman was attacking causing him to trash the vehicle. He also asked friends to join him in a suicide pact, saying that dying was the best way to transcend human consciousness. His plan: Set the bus on fire with everyone inside.”

Reading that initially … and just now … gives me chills. This was a guy screaming for help. And he was getting some help – from some of his friends, family, etc. – but there are claims, according to InsuranceNewsNet, that Tony set the fire himself (when he ultimately passed away in the house fire). We may never know if that is true or not – but I say this to shout from the rooftops that mental health is real, folks. It doesn’t matter if you’re a celebrity or not; it impacts SO many people every single day.

Okay … so shifting to Tony and his estate …. And estate planning…

Guess what? Following Tony’s passing, there was no estate plan discovered – no Last Will and Testament, no Trust, nothing! So, here we go again – Tony is a perfect example of so many that we have talked about on Legal Tea. Tony was wealthy, likely surrounded by many, many lawyers in his life, and had no estate plan. Why? Who knows! We could guess – but that wouldn’t do us any good at all. We are left with the fact – and the facts are that Tony did not have a Will, Trust, or any kind of estate plan.

According to Las Vegas Review Journal, Tony’s father, Richard Hsieh, and brother, Andrew Hsieh, are the ones managing and overseeing Tony’s Estate. As part of a routine Probate Estate proceeding, there is a designated point in time where creditors are allowed to make claims on the Estate – so basically, the Court offers to the public a chance to say, “Hey, this person owed me ‘x’ amount of money.” According to that Las Vegas Review Journal article, there have been in excess of $150M in claims filed in Tony’s Estate – and even beyond that, there are minimally 3 additional litigation cases alleging breach of contract, where Tony’s Estate is a party.

According to an InsuranceNewsNet article, “Hsieh’s father and brother are trying to pull together all the property he bought and promises he made, sometimes on sticky notes, during the months leading to his death.” I repeat, STICKY NOTES. You know, I remember my Contract Law class in law school talking about one of the most foundational cases about a contract being made on a napkin at a bar. So, hey, if the appropriate elements are met to consider the sticky notes contracts, it’s not out of the question. Crazy, right?!

Another big thing occurring in Tony’s Estate is in regards to all his real estate holdings. Many of his real estate investment properties are in downtown Las Vegas and as the Las Vegas Review Journal article states, it’s sort of “TBD” on what happens to all of those – some boarded-up buildings and vacant lots. Some people think that if his Estate sells those, it may spark some new, *shiny* development in Las Vegas.

Along those lines, Richard and Andrew, Tony’s father and brother, respective, and the Estate representatives, actually have formally filed 100+ sale notices for various Las Vegas properties – and another 20 or so sale notices for properties in Park City, Utah. According to an attorney for the family, the sale notices were filed “to allow for a possible future sale” and that some of the real estate may not be sold. Yet another big ol’ “TBD.”

I feel like I keep saying “another big thing that occurred in Tony’s Estate” but there really are just all these very random, big things that have occurred. So yet another example is, do you remember when I was talking about those creditor claims on Tony’s Estate? Well, one of the biggest creditor claims came from Tony’s assistant, Jennifer “Mimi” Pham. According to the Las Vegas Review Journal, Tony and Mimi had been friends for seventeen years. Anyway, Mimi claims many things among several different lawsuits against Tony’s Estate – breach of 2 contracts she had with Tony; claim to “anticipated profit” from a venture Tony was starting; and contract interference. The Estate’s representatives, Richard and Andrew (Tony’s brothers), fired back claiming that she, among a few others, had the “greatest access to Tony and it was obvious to them and others that Tony was physically and mentally unwell.” In essence, the attorneys for the Estate claim that Mimi capitalized on Tony’s declining mental health.

In terms of where things stand now, I caught an article on 8 News in Las Vegas that a settlement was reached between Mimi and the Estate – and that Mimi actually had to pay the Estate $750,000 – which I honestly thought I was reading incorrectly because she’s the one that made creditor claims on the Estate. According to the article, there were no other details provided on “why” the settlement went like this. I suppose this odd situation may be the perfect way to end this quite-odd episode … I’m not sure if I know more or know less at this point on the estate of Tony Hsieh. I obviously know more than when I first started researching, but boy – this is a head scratcher, for sure!

Unfortunately, Tony’s lack of planning and lack of being organized created many, many problems – with a little bit of planning, he could have very easily provided for WHO he’d want to get his estate. Because he left no estate plan, that means that his Estate is going by the state’s intestacy laws, which basically means the State designates who-gets-what. Another problem of his lack of planning … is that his Estate will pay so much money in Estate taxes. There are ways to allow Estates to pass to beneficiaries in a tax-friendly manner. Here? Not so much. I’m certain, like so many celebrities here on Legal Tea, we’ll see the IRS question his Estate value – and I’m sure it’ll create a disagreement between the Estate representatives, Tony’s Dad and Brother, and the IRS. Time will tell…

Beyond the total lack of planning, it seems he left things incredibly disorganized too. The post-it note contracts? That very well may make my lawyer brain burst into flame. How does a successful businessman think that post-it notes are a GOOD way to contract with another party? I mean, don’t get me wrong – I use my fair share of post-its, but to make contracts? No. To put SUPER important things on them? No. To remind myself to do XY or Z? Yes. There’s a big difference. When we leave things this disorganized, it doesn’t magically clean up when we pass away. SOMEONE will have to clean it up – and if there’s one thing I hear from my clients often when they finally do their estate plan, they do it to make things easy after they pass. Here with Tony? I’m sure that Tony’s Dad and Brother are pulling their hair out. Super sad.

Okay, let’s wrap this episode up – next week we’re back to a “cautionary tale” episode where we talk about real-life clients, real-life cases (you know, not celebrity-level cases) that I, or my office, has personally worked on. So on next week’s episode, we’re going to be talking about a few different stories/examples of where I’ve seen beneficiary designations go very, very wrong. A little insider secret – estate planning is not JUST about doing documents; it’s also about making sure your assets SUPPORT those documents and place nice with those documents.

So yeah, tune in for that next Tuesday, Legal Tea Listeners! Until then, take care and be well!


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