>>Today, I’m going to tackle the daunting problem of Eldercare/Legal Incapacity. More particularly, I’m speaking about the legal tug-of-war which might erupt between a senior, relatives, partners /major shareholders, etc. when there’s an aging business founder-owner in declining health. At it’s center, a file such as this might have a ‘pal’-caregiver wrongful dismissal type action. This doesn’t happen everyday, but it does occur. Consider if you will, the 2015 case of the late Sumner Redstone.<<
Gold’s Legal Minute*GLM*
By Allan Gold, lawyer Montreal and elder law attorney
Vol. 14, #4 – June 30, 2023
Opening
“It’s draining!” That’s what a spouse and adult children might say about the wrangling over the care of a senior. Everyone has an opinion. Each one thinks he/she knows best. Of course, nothing is ever perfect. There’s trouble no matter what you do! We can imagine the heartache all around.
“It’s Complicated!” That’s what most entrepreneurs would say about running a family business. Disagreements over operations, projects, etc. are par for the course for any enterprise. But the family dynamic compounds things enormously. People could get testy. Most would admit that working with relatives invites strife. There might be constant complaining, bickering due to sibling rivalry, uneven workloads, spousal pressures, complications of divorce & new relationships, etc. This friction can run the gamut from unpleasant to real nasty or all the way to a full-blown toxic work environment.
“It’s a ‘Frankenstein’ dilemma/confrontation.” That’s what I call the situation when the discord over senior care reaches the workplace. Perhaps, you never thought of it. However, it can and does happen. “How can that be?” you ask. It’s when the subject person is an aging founder-owner in declining health. More precisely, it’s when the senior is the boss and the fight is over his/her need for eldercare – read a senior’s legal capacity. That’s the perfect storm. Preexisting tensions at the top become exacerbated. Without leadership, the firm might get bogged down and falter. The conflict might give rise to a power play (struggle), a change in ownership or even the sale of the business.Get the picture? Not very pretty eh? Please read on.
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What Is Eldercare? “Eldercare is an umbrella term for a wide array of services intended to help older people live as comfortably and independently as possible. Examples range from basic transportation, cooking, or cleaning to complex medical care.” (Source: https://www.investopedia.com/terms/e/elder-care.asp )
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“To care for those who once cared for us is one of the highest honors.” ― Tia Walker, “The Inspired Caregiver: Finding Joy While Caring for Those You Love”
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Blast from the past – Let’s revisit the Sumner Redstone Health Care Fight.
I wrote an article about Sumner Redstone, the 97-year old billionaire, who died in the summer of 2020. He was the central figure in a 2015 health care fight that made it to a U.S. Court. In the blog of Oct. 28 2020, I summarized the basic facts as understood by me. Here’s a snapshot version. Sumner Redstone was a very wealthy man, executive chairman of a major company. It’s noteworthy that it started out as a small, family-controlled business and over his career, he made it a juggernaut! Divorced from his second wife, he had young girlfriends, whom relatives eyed suspiciously. Redstone, then 92, threw out his live-in companion/caregiver, Manuela Herzer. Redstone instituted a new health care directive, naming P. Dauman, a longtime business associate to replace Herzer as his health care agent. In late November 2015, Herzer brought a petition seeking to reclaim her role from Dauman. Herzer challenged Redstone’s mental capacity to amend his health care directive. This in turn, caused people to ask about Redstone’s ability to be executive chairman. Herzer was alleging that Redstone’s daughter Shari was maneuvering herself into her father’s life after years of tension between father and daughter.
Assessment & Commentary
Analysis.
I won’t further analyze this particular case. Instead, I will dissect it. I will try to identify its parts. Here’s how I see the situation.
-Undercurrent. There was a pre-existent history of stress in the family dynamic. And rightly or wrongly, there was suspicion and distrust by direct family members of one or more younger women newly arrived in the life of the aged person.
-Trigger. The precipitating event was the ejection of the former companion-caregiver from the home of senior. It was also a fact that she was replaced as his health care agent.
-Position of Petitioning Party. Upset and not accepting these occurrences, the former companion-caregiver instituted legal action. Apparently, she believed that the senior person was not well enough to fend for himself and that he needed help. And as understood, her allegations were something to the effect that he could not change his health care directive because he was so unwell that he wasn’t competent to make legal documents. (N.B. I perceive her judicial demand in like terms as that of a palimony and/or wrongful dismissal action. On one part, it has some similarity to a ‘palimony’ suit. Such term refers to the situation of someone seeking palimony or financial support payments that can be made to unmarried partners following a breakup. Such have been permitted in California ever since a 1976 decision in the state Supreme Court. On another level, it emulates in some ways, a wrongful termination or wrongful discharge, which is a situation in which an employee’s contract of employment has been terminated by the employer,)
-Opposition by the elderly. The aged gentleman contested the action of the former companion-caregiver. I extrapolate that he was more or less saying, “I’m well enough and I can do what I want and please mind your own business.” Indeed, I equate his position to the sentiment expressed by The Animals, through the lyrics, “It’s my life and I’ll do what I want!” I presume that he changed his health care directive either at his own initiative, at the instigation of or at least with the concurrence of immediate family and/or close associates.
-Reaction of Senior’s Inner Circle. It’s perfectly reasonable that the immediate family would act, trying to protect their loved one. And I deduce they were probably shocked by the effrontery of the former companion-caregiver in bringing suit and as a result, they fiercely contested her claims. Indeed, for them, it was likely a matter of principle and the belief that the opposing party was wrong, morally and legally.
-Boardroom. One or more of Redstone’s business associates were drawn into this dispute of a personal nature.
That’s how a dispute of a personal nature gets to the office/boardroom. So that’s the potential problem. What can you do about it? Is there a solution?
SOLUTION: The Right/Wrong Way Pair
Simply put, you have two choices.
#1 DO nothing. You might remark, “Not on your life.” To this, I would retort, “The goodness of your later life is the point!” In the alternative, you might say, “Leave well enough alone.” To this, I would respond, “But what happens if someday, you’re not well enough to manage on your lonesome and you need help, do you think you would brush off the idea with such a comment?” Instead, I say, “DON’T FOOL yourself. These aren’t concerns to be swept under the rug. DON’T DOWNPLAY the risk. DON’T LULL your self into a false sense of security. DON’T THINK that in the end, everything will work itself out, so you now don’t have to do anything. Indeed, doing nothing is quite a recipe for disaster!
#2 TAKE concrete action. Do what has to be done. Most founder-owners say, “The business is my baby!” If so, DON’T DROP the ball now.
Here’s the hard truth. When the legal capacity of a leading executive/board member is called into question, especially in a public way, management must take notice. The board of directors will be obliged to consider whether he or she can continue to hold company office. An expertise stating that he or she is suffering from a degenerative disease (e.g., Alzheimer’s) could force their hand. If the aged founder-owner is forced to step down, that might create a power void.
FIVE-STEP PROCESS
Five-step Process
Getting the message yet? Wondering about what you’re supposed to do? For purposes of specificity, I’m going to boil it all down to five things on your ‘to do list.
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1. BEGIN/COMPLETE the planning of an exit strategy. That’s the means whereby a business owner shall either share or transfer his/her ownership to someone else. This is really important. The reason is twofold. First, you want the business to outlive you and flourish, don’t you? And ‘Job 1’ is that your enterprise doesn’t lose momentum. Second, it’s a way to preserve family capital. It’s also a method of promoting your future well-being.
2. SELECT your successor. Think about succession the sooner the better.Transitioning from the founder-owner is hard. This is a key task in family business succession planning. You need to get it exactly right the first time.
(a) If a smaller, closely-held, family-owned business, CONSIDER your partner. If he/she isn’t your choice, Try to keep any conflict between the two of you to a minimum. If not a co-owner, Look to the next generation. Start grooming your successor. You know that leading a family business isn’t easy.You know what it takes. You also see the future. You have identified the next big challenge.You can forecast the type of person needed to make it over the hump. It’s difficult to choose a new President/CEO. It’s not about family. It’s business! If the right person isn’t already working for you, then go outside. But remember the fit factor is vital here!
(b) If a big business, KNOW that selecting a company’s CEO is one of the most significant decisions in an organization’s life. It will create a preordained road forward. The board of directors has an important role to play in CEO succession. Typically, there’s a CEO Search Committee (the “Committee”). The members will determine the needed skills, experience, and personal traits. Indeed, it’s a process.
3. EXAMINE the use of a voting trust. As per Investopedia, that’s a “legal trust created to combine the voting power of shareholders by temporarily transferring their shares to the trustee.” Ask yourself two questions: “Are there two people in the running for the top job?” “Are you concerned about your preferred candidate getting the support needed after you’re gone?” If so, the institution of a voting trust will go a long way to making that happen.
4. EXPECT the unwanted. I’m sure that you might have wishes, if and when, you’re unable to take care of yourself and your property. If so, make a Protection Mandate (in Quebec) or a Power of Attorney for Personal Care/Continuing Power of Attorney for Property (in Ontario). Have your say. Do it! Do this for you! Do it right! Don’t wait. Do it today! Charles-Guillaume Étienne said, “If you want something done right, DO it yourself.” 3
5. HAVE the talk. When approaching retirement age, one’s health may decline especially if there are preexisting risk factors. When it comes to Eldercare. telling close relatives about your concerns and wishes is helpful for all concerned. It’s a tough subject – but having the conversation will allow you to check off another box on the ‘To Do List.’ It’s also a strategic move for a founder-owner.
CONCLUSION
I’m using the Sumner Redstone case in order to illustrate what could befall an aged person. Reading this blog post is likely to disturb your equilibrium. I’m sure it’s hard to get your head around the idea of needing, sometime soon, personal care for your day-to-day living. Most probably, it scares the living daylights out of you. I’m sorry.
I’m just trying to alert Mr. & Mrs. Everybody of the problem and the risks involved. We mortals all want ‘over easy,’ but chances are that some of us will find ourselves hardly good! With age creeping up, there’s an even greater chance of poor health for all of us. No one wants to end up lacking lucidity due to diminished cognitive functionality, needing geriatric care. We recognize that it’s going to be tough.
My further purpose is to send a message to family business owners. Simply put, DON’T DELAY your retirement planning. Your boardroom might already be a boxing ring. If you don’t act, it might later become a war zone. Consider the possibility of an aging founder-owner in ill health. Take all measures for the good and welfare of your older self. Take all precautions in order to reduce the risk of harm to the enterprise.
Last Call! Kids are known to ask, “Are we there yet?” So too with the senior founder-owner. If you’re reading this, I would answer, “Thankfully, not yet. You still have time to do something important in the better interest of you and your family and also to better secure your company’s future!”
Allan Gold www.allanjgold.com
P.S. Here’s something to think about – “As your care recipient’s advocate, be involved, don’t accept the status quo, and don’t be afraid to voice your concerns.” ― Nancy L. Kriseman, “Mindful Caregiver: Finding Easecb: Finding Ease in the Caregiving Journey”
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!!! Call to action: To every attorney in the field, I say, “Write a post/article. Let’s help seniors & their families become better informed about elder law Canada! And by the way, please send it along. I’d love to read it.”
NOTICE – CAUTION –DISCLAIMER. The material provided herein is of a general nature, strictly for informational purposes. The interpretation and analysis is not to be misapplied to a personal situation with a particular set of facts. Under no circumstances, are the herein suggestions and tips, intended to bring a reader to the point of acting or not acting, but instead, the hope is that they are to be a cause for pause and reflection. It is specifically declared that this content is not to be a replacement of, or a substitution for, legal or any other appropriate advice. To the contrary, for more information on these presents, related subjects or any other questions, it is the express recommendation of the author that everyone seek out and consult a qualified professional or competent adviser.
1 https://www.investopedia.com/terms/e/elder-care.asp
2 https://www.investopedia.com
3 https://en.wikipedia.org/wiki/Charles-Guillaume_%C3%89tienne
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