By Trusts and Estates Attorney Kerri Castellini
Sumner Redstone, the 93-year-old American businessman and majority owner of the National Amusements Theater chain, is no stranger to family dispute. For almost a decade, he has been plagued by lawsuits concerning the use and control of his vast wealth, estimated by the New York Times to be over $5 billion.
Through the National Amusements Theater Chain, the Redstone family has majority control over entertainment companies such as CBS Corporation, Viacom Media Networks, and Paramount Pictures. Although it is alleged that the nonagenarian has extensive estate planning which includes the use of at least one trust, his recent removal of current trustees has resulted in a flurry of litigation surrounding his competency.
Sumner Redstone’s saga highlights a number of issues that are present in every estate plan: family dynamics, selection of fiduciaries, and loss of capacity. Estate planning documents are often created and tailored to a client’s goals, assets, and family dynamic. Although two estate plans may look the same from the outside, often, how an attorney and clients arrive at the decisions memorialized in the plan are very different.
A key component of the decisions made often revolve around family dynamic. For example, it is often tempting for some clients to name their oldest child as the Personal Representative of their estate. However, whether or not the oldest child is the best fit for the job may depend on their attention to detail, ability to manage assets, and relationship to his or her other siblings. And of course, an additional strain on family dynamics is the grieving process.
Every individual grieves differently, and grief can also turn quasi-functioning relationships on their tails. Some individuals choose to plug away while grieving and keep themselves busy. Others may choose to procrastinate and avoid dealing with their feelings. The result can be detrimental when a grieving individual is also a fiduciary.
The death of an individual can often start the clock running for the time to make certain elections and file tax returns. If a fiduciary delays in administering an estate or trust, there could be penalties or interest that result. The difficulty with estate planning is that often clients cannot predict how their family will react to their death.
The selection of Sumner Redstone’s trustees is significant, because those same individuals can assert control over the companies that provide for the family wealth. However, the selection of trustees in an estate plan can be critical even for individuals with significantly more modest wealth. As a result, some clients entertain naming an individual who is not a family member, or a professional that can manage assets and make decisions more objectively.
Finally, the underlying issue of loss of capacity is often addressed with estate planning. Even though many trusts include language to address the loss of a capacity of the settlor or the trustee, a determination of incapacity can be difficult. For example, with many individuals, they may have moments of forgetfulness, and other moments of complete capacity. As a result, some medical professionals may come to different conclusions regarding the capacity of an individual to manage his or her own affairs.
Estate planning can be complicated, made even more so by Sumner Redstone’s ultra-high net worth and tricky family dynamics. Although estate planning has not spared him the troubles of litigation, it is likely that without it, even more litigation may have ensued.