Redstone & You

Posted on: Jun 13, 2016

Sumner Redstone is a billionaire. At one time he was a pretty high profile billionaire, especially in the tabloids.
redstoneThat he’s in the news again isn’t all that surprising. That his story is a cautionary tale for everyone as they grow older and contemplate planning for their later years is very surprising.
Redstone is now 93 and, by all accounts, in failing health. He had extensive Estate Planning done years ago by the kind of lawyers who teach Estate Planning at prestigious law schools—as befits the ‘owner’ of Viacom & CBS, among others.
Yet, in the last nine months, his lawyers have found themselves in a very uncomfortable—perhaps unique—position. In a case that ended in February they were in a California court arguing that Redstone was competent enough to remove his longtime (and much younger) girlfriend from a trust and residence in his name.
They’re in court now—right now—arguing that he was incompetent when he removed several Long-Term friends/business associates from the board of Viacom.
If they win this argument—as they won in February after a judge interviewed Redstone via skype—they set a fascinating dichotomy that will surely come back to haunt the estate after his death: competent in February, incompetent in May, was he ‘in and out’ of a ‘competent’ frame of mind—and if so, how long and how many decisions were affected?
A front page story in the New York Times last Sunday described Redstone’s estate plan as a ‘disaster’, ‘in shambles’, despite the high powered cadre of attorneys implementing ‘his wishes.’
The Times’ point is simple: the planning apparently covered every contingency except the one that was most certain to occur—Sumner growing old.
There were no provisions for conservatorships to kick in at certain points along the way –say at age 80, or when he was obviously becoming incapacitated.
Indeed, there was no definition of incapacity whatever in his documents, therefore leaving it to the courts to declare him incompetent if and when the time comes. Until then, decisions purportedly made by him are destined, it seems, to be challenged in court.
And, there are a lot of those decisions. For a 93-year-old in failing health Sumner Redstone has been very active over the past year. Those decisions don’t just affect his estate, they affect the day to day business operations and future of a multi-billion corporations and the shareholders that own them.
Aside from the wealth and glitz and publicity, the Redstone story is a common one—one that is getting more and more common everyday—diminished capacity and undue influence.
As the Times notes, Mr. Redstone, “now faces a situation where it appears that people around him are competing for control and each has their own objectives.” A pattern, an expert goes on to state, that “is happening in epidemic proportions” across income levels.
In short, “elderly people may be especially susceptible to the influence of the people who happen to be around them during their waning days,” and people are taking advantage of them. In droves.
Normally, we see this after death when new wills, trusts, or changes in beneficiaries were made shortly before death (see our last blog post).
With the Sumner Redstone matter, we’re seeing it as it occurs and it’s an ugly thing to behold.
This only goes to show that this can happen in the most carefully planned estate—when contingencies for incapacity are not addressed.
We see a lot of undue influence cases after death, many of them, like the Redstone matter, which is only going to get messier from here on, were preventable by including elder law provisions in the estate plan.
In any estate, at any level, failure to do so is costly in every regard.

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