Last month, the Wall Street Journal published an excellent article describing the messiness of Tony Hsieh’s, former CEO of Zappos, estate plan. Here is a link to the article.
Here are four key takeaways from the article.
1. Notice; Location. It is essential not only to have an estate plan in place, but also to notify fiduciaries – and sometimes beneficiaries - of the existence and location of estate planning documents. We often advise our clients to promptly share a copy of their estate plan with their executor, trustee, and representatives, to help ensure that if the client does pass away, there are mechanisms in place to ensure prompt management of the estate in accordance with our clients’ wishes. We also maintain an electronic copy, and a copy of the original will in a fireproof safe, for all of our clients’ documents.
2. Disclosure. Full disclosure of intent and the fiduciaries’ roles will help avoid wasted time, money, and stress after the deceased is no longer here to express his or her wishes. It may not be practical – or wise - to share full disclosure with beneficiaries, but at a minimum, we strongly recommend our clients make their wishes known to the executor, trustee, and/or other representatives, in an effort to avoid surprises after the fact. This is especially important when someone dies unexpectedly, such as Hsieh, who died in a house fire at the mere age of 46 years old.
3. Taxable estates require additional planning. The current federal estate and gift tax exemption for an individual is $13.99M. The current federal estate tax rate is 40 percent. Therefore, the federal estate tax is extremely penal, potentially costing loved ones and other beneficiaries millions of dollars. Advanced Lifetime PlanningTM, which is our system for moving assets into irrevocable trusts and/or charities, is essential for larger estates. We encourage our clients to work with an experienced attorney, accountant, and financial advisor to implement strategies now that will maximize the tax efficiency of, and minimize the tax hit on, their estate.
4. The Lawyers Benefit. Hsieh passed away in 2020, so the estate has been dragging on for nearly five years already. One can only imagine the enormity of the stress, and legal fees, this estate mess has wrought on his family members and loved ones. Without proper planning, only the lawyers benefit. We feel strongly that spending some money now, to engage in proper planning, will save loved ones a significant amount of stress, money and time down the road.
If you have questions about business or estate planning legal matters, contact Fournier Legal Services to learn more.