Challenging Estate Plans: Modification of Sumner Redstone’s Estate Plan Prompts Allegation of Mental Incapacity

Sumner Redstone, the controlling shareholder of Viacom Inc. and CBS Corp., is going to trial over claims that he is mentally incompetent.  Redstone stepped down as executive chairman of both companies in early February.

The claims of incompetency come from Manuela Herzer, Redstone’s alleged ex-girlfriend, who was recently removed as Redstone’s health-care representative.  In her suit, Herzer argues that Redstone lacked the mental capacity to remove her as his health-care representative and evict her from his mansion last October.  Additionally, Herzer claims that Redstone has been “the victim of undue influence, fraud, manipulation, and chicanery” by those around him.

On February 29, 2016, Los Angeles County Superior Court Judge David Cowan denied Redstone’s motion to dismiss without prejudice. According to Judge Cowan, the findings of the geriatric psychiatrist selected by Herzer raised “a reasonable question” as to Redstone’s capacities.  This is after Redstone’s legal team presented evidence from both Redstone’s primary care physician and a geriatric psychiatrist, who was retained by Redstone’s counsel, who believe that the 92-year-old media mogul is mentally competent.  Judge Cowan has stated that the court will need to determine which of the physicians has most accurately represented Redstone’s mental status.

Moreover, Judge Cowan is planning to hear from additional witnesses in order to make his determination.  Philippe Dauman, Viacom’s Chief Executive Officer, has been ordered to provide testimony in the case.  Dauman replaced Herzer as Redstone’s health-care representative when she was removed in October. Judge Cowan said he found it unusual that a parent this late into their life would choose his business colleague over his daughter, and even his grandchildren, to be in charge of his care.  Moreover, Judge Cowan questioned whether Dauman, who is in charge of a large company in New York, has the time or the ability to take care of Redstone’s health-care needs even assuming the best intentions.

Judge Cowan noted that it was unusual that he has not received any statement from Redstone himself.  However, at this point, it is unclear whether Redstone will be called to testify at the subsequent trial.  The non-jury trial is set to begin on May 6, 2016.

Redstone’s lawyers responded to the denial of the motion to dismiss by stating that the “decision is not a finding on the merits and it does not change the fact the Ms. Herzer’s motives are purely financial.”  They have argued that Herzer is using the incompetency claim to challenge the fact that she was removed from Redstone’s will.  It is purported that Herzer was in the position to inherit nearly $70 million in assets before she was removed from Redstone’s estate plan.

While many questions remain regarding Redstone’s fortune, his controlling shares in both Viacom and CBS are not at issue. If the judge were to find Redstone incompetent the shares would pass to a family trust.  This trust was in place prior to the time Herzer claims Redstone was incompetent, and is not in doubt in this litigation.

This high-profile case may have implications for how and when individuals make health care directives.  Please do not hesitate to contact the attorneys of Chepenik Trushin LLP, who are ready, willing, and able to assist with your important health care decisions and all of your estate planning needs.