Hyden, Miron & Foster, PLLC Law Blog

Thursday, June 16, 2016

How to Avoid Redstone Estate Mistakes

What went wrong with Redstone's estate planning?

One would assume that ailing media tycoon Sumner Redstone's estate, estimated to be over $5 billion, would be as perfectly managed as any in the world, but one would be wrong. Redstone, who just turned 93 and suffers from dementia has ended up with a chaotic situation no one envies. Many lawsuits swirl around him and embarrassing details about his sex life and cognitive loss have been released to the press. Although a recent lawsuit brought against him by Manuela Herzer, one of his more recent romantic partners, was dismissed last month, the damage to his reputation had already been done.

Now, his estranged daughter, Shari Redstone, is embroiled in a battle with Philippe Dauman, the apparent heir to Redstone's throne. Because Sumner Redstone controls CBS and Viacom, a great deal is at stake. Dauman is the chief executive of Viacom and had been Redstone's trusted confidante for a long time. He is also the trustee of the trust that controls 80 percent of National Amusements, a company in which Redstone's daughter owns the remaining 20 percent. To make matters more complicated, National Amusements owns 80 percent of the voting stock of both CBS and Viacom.

Redstone, unaware, is in the unfortunate position of being targeted by the people around him as they compete to take control of his financial assets and the companies he has run for decades. While those around him attempt to influence decisions regarding his fortune, his trust, and Viacom, no one knows what Redstone himself wants. While an extreme case because of the huge size of Redstone's estate, this situation is far from unique. According to Kerry Peck, co-author of the book Alzheimer's and the Law, this pattern of greed and confusion "is happening in epidemic proportions" throughout the country.

Most commonly, the scenario goes as follows: caregivers, often younger women, insinuate themselves into the lives of older men through flattery and flirtation. Con artists of this type seek out their victims in seemingly innocuous places like senior centers and places of worship. Before long, their older "friends," (the victims) who are lonely, vulnerable, and somewhat cognitively impaired, become their romantic partners. Peck reports that this con game now occurs "with stunning frequency.”

Scam artists targeting older people with large estates are not limited to would-be "lovers." All sorts of shady characters and disreputable "charities" pursue individuals with deep pockets and shallow memories, sometimes hitting up the same people for contributions again and again within short periods of time.

This distressing situation is happening more and more as people live longer and frequently begin a mental decline. The elderly are especially susceptible to cons perpetrated by those around them when they are in failing health. Anyone who provides care and comfort can come to be perceived as a trusted companion, no matter how malevolent their intentions. And this is not only a problem for the extremely wealthy. Any size estate can attract a criminal.

To avoid this kind of elder abuse, experts recommend the creation of a trust, one that is revocable or irrevocable, that prepares for future incapacity. The document should define what is meant by "incapacity." Such a document can create a standard less rigorous than the typical legal standard, and can designate the person who will make the determination of incapacity. This will prevent legal wrangling later and allow the individual to make the decision about whom to trust when his or her faculties are still fully intact. Some trusts are set up so that financial decision-making is turned over automatically when the individual in question reaches a certain age.

Elder abuse by practiced con artists, estranged relatives, or caregivers is all too common in Arkansas, as well as in the rest of the country. This is one of several important reasons that you should work closely with an estate planning attorney while your mind is clear and your true wishes can be firmly documented. It is never too early to map out an estate plan with a reputable and highly skilled estate planning attorney to make sure your assets are left to those you love most and to keep your family safe from financial intruders.

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