With the next phase of the Sumner Redstone saga underway in a Boston courtroom, much press has been devoted to how the 93-year-old media mogul created a situation where family members are pitted against one another in the battle over control of his entertainment empire.
In the final analysis, “these cases are about families and they’re about people,” said Elizabeth Adinolfi, counsel in the litigation and matrimonial and family law departments at Phillips Nizer LLP.
“The biggest takeaway from the Redstone case is that people have to manage their family as much as, if not more so, than they manage their money,” Adinolfi said. “If you don’t have a family that has healthy, functional relationships, when situations like this arise, when someone is declining, there are going to be battles and fights, especially when there is this much money on the line.”
Redstone has reportedly been estranged from his children for many years, but more recently reconciled with his daughter Shari. He remains estranged from his son Brent, who sued Redstone in 2006 for favoring Shari in the family business, according to press reports.
Adinolfi noted that people can be very successful in their professional lives, yet lack the skills to be successful in the family business.
Looking to her own practice, Adinolfi said she has never seen a guardianship case go to court without sacrificing family relationships.
She said an advisor can play a crucial role in averting an end-of-life or post-mortem crisis in wealthy families. He or she must engage the client in an admittedly difficult conversation about family relations. If these are fractured, is it possible to repair some of those fractures—for example, by reconciling with an estranged child or making peace between squabbling siblings?
The advisor must point out to the client that if these relationships are not mended, they will almost inevitably lead to fights later on. Many advisors are understandably uncomfortable delving into such personal matters, Adinolfi said, but that is part of what they are being paid to do.
She said that in the most fraught family situations, the advisor may recommend professional counseling to help with the process.
Adinolfi said it is best for a client to make estate plans when competency is not an issue. “People often wait to take action until they show signs of decline,” she said. This can then lead to accusations of undue influence exerted by interested parties, as it has in the Redstone case.
At issue in the current court case is who controls the trustees of Redstone’s trust, which will control his assets after he dies. His daughter and her son are trustees, along with five non-family members. Redstone recently ousted two of these trustees, and they now contend that Redstone is incapacitated and has been unduly influenced by his daughter.
The high-stakes courtroom drama intensified when Keryn Redstone, the daughter of Sumner Redstone’s estranged son Brent and a beneficiary of his trust, announced that she would side with the two ousted trustees.
Various instruments are available that may forestall these kinds of problems, Adinolfi said. A trust, either revocable or irrevocable, can be one way to head off contention over the grantor’s competence. In this regard, trusts are most effective when incapacity is precisely defined, and who will determine competency is spelled out.
Redstone’s irrevocable trust, which controls his assets, including Viacom and CBS, does not define capacity, accord to reports. As the trust’s sole beneficiary, he can make all decisions pertaining to the trust until he is determined to be incapacitated. As no one has been designated to determine incapacity, only a court can make such a determination in his case.
Adinolfi said that in less-contentious family situations, the benefactor can bring all interested parties to the table, lay out his or her intentions and have everyone sign off on the fact of the person’s competency.
However, she said, “The reality is that people will litigate, no matter what the plans are,” especially when a lot of money is at stake.
