NSW Court upholds appeal in estate planning case
The NSW Court of Appeal has overturned an earlier court decision involving a deceased estate, after determining that the annual payment of annuity to a widow was not an adequate provision for her proper maintenance.
The case of Steinmetz v Shannon  NSWCA 114 involved the estate of Geoffrey Leslie Steinmetz, who died on 4 October 2016.
At the time of the hearing, the estate amounted to $5,250,000, comprising a liquor licence for $200,000, four properties totaling $2.6 million and $2.45 million in shares in a company called Winsome Properties Pty Ltd.
In addition, the deceased was the sole beneficiary of the Steinmetz Superannuation Fund, for which there was no binding death nomination.
It was therefore an estate asset, worth $1.4 million, of which $450,000 had been distributed to the respondents. Accordingly, the total distributable estate, disregarding that distribution, was in the order of $6,650,000 net.
According to the judgment, he left a will made only two weeks earlier on 19 September 2016, probate of which was granted on 20 September 2017 to the respondents his daughter Nicole Shannon and his son James Steinmetz.
In the will, the deceased gave a legacy of $15,000 to his godson John Anthony Steinmetz; the contents of his residence at Crescent Head to his widow, the appellant, Gayle Maria Warr Steinmetz, his second wife of some 28 years standing; and the rest and residue of his substantial estate of approximately $6.8 million to the respondents, who were the children of his first marriage. This was on the condition that they pay the appellant an indexed annuity of $52,000 for the remainder of her lifetime.
In an earlier decision, Steinmetz v Shannon  NSWSC 1090, the appellant applied for a family provision order, which was dismissed by Justice Pembroke.
In the 2018 decision, Justice Pembroke found that that the annuity provided by the will was, in the circumstances, adequate provision for the appellant’s proper maintenance and advancement in life.
This was on the basis that the plaintiff would be able to “continue to live in the home that she has owned since 1991, in the same town, with the same familiar facilities, friends and connections, with an expected annual surplus of income over expenditure of approximately $34,000 and without having to realise her cash deposits and other assets, unless she wishes to do so”.
The Court of Appeal decided to set aside the orders made in the 2018 decision and allow the appeal.
The Court found that leaving a 65-year-old widow, who is capable of managing her own affairs, reliant for the rest of her life on quarterly payments by the children of her deceased husband’s first marriage, with one of whom there have been historical tensions, rather than placing her in control of her own resources, was not an appropriate form of provision.
In the context of the relationship and marriage, taking into account the sustained and substantial contributions the appellant had made to the welfare of the deceased, the size of the estate, that there was no one else responsible for the maintenance of the appellant, the appellant’s reasonable wish to relocate, and the absence of competing claims, it found that the annuity was not adequate provision for the proper maintenance and advancement of the appellant.
The Court ordered that Steinmetz receive from the estate of the deceased a legacy of $1,750,000, in view of the provision made for her by clause 7 which provided that she would be paid $52,000 per annum from an annuity for the remainder of her lifetime.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.