Court rules in favour of widow in death benefit case
The Supreme Court of NSW has dismissed an estate planning case between three daughters and the widow of the deceased who was appointed the sole beneficiary of his superannuation accounts.
In the case of Vasey v Henry, the daughters of the deceased, Stephen James Henry, sought orders for further provision for their proper maintenance, education or advancement in life out of the estate or notional estate of the their father.
The plaintiffs’ mother was the first wife of the deceased, from whom he was divorced before his death. The defendant in the case, Dianne Barbara Henry, was the widow of the deceased.
In her evidence, Ms Henry stated that she had been nominated as the sole beneficiary of the deceased’s superannuation accounts with AustralianSuper.
According to the court documents, there were almost no assets in the deceased’s estate at the date of his death. Ms Henry and the deceased owned a property jointly so that, upon Mr Henry’s death, it passed directly to her by survivorship.
Consequently, Mr Henry’s interests in the property and the superannuation funds were the only assets available for family provision orders in favour of the plaintiffs on the basis that one or both of those assets were designated as notional estate of the deceased.
On 23 June 2017, Ms Henry arranged for the amounts in the deceased’s superannuation accounts to be paid into her own superannuation accounts.
She sold the property she had jointly owned with the deceased for $520,000, with settlement occurring on 18 September 2017.
She applied part of the proceeds of sale towards the purchase of a unit in a retirement village at Port Macquarie for a price of $350,000. The balance of the price was added to Dianne’s superannuation account.
Justice Stephen Robb was not satisfied that adequate provision had not been made by the deceased’s will for the proper maintenance, education and advancement in life of the daughters.
“First, the evidence justifies a finding that the deceased gave careful consideration to his testamentary obligations and decided that it was a proper exercise of his testamentary bounty to leave the whole of his estate to Dianne, his wife, as well as to nominate her as the beneficiary of his superannuation funds,” Justice Robb stated.
“The deceased had already made provision for his first wife, the plaintiffs’ mother, by means of the marital property settlement. It was, in my view, in accordance with reasonable community standards and expectations that a husband in the deceased’s position in the circumstances of this case, and with the limited remaining assets at his disposal, would leave all of those assets to his wife in his will.”
The evidence clearly establishes, he said, that Ms Henry and the deceased had a loving relationship for a period of about 16 or so years, and she provided him with exemplary support and comfort during the course of his final illness.
It is also significant in this case, he stated, that although the deceased’s notional estate may technically have had a value of $552,513.54, an amount in the order of $332,413 of that value could be attributed to Ms Henry, given that she jointly owns the property with the deceased and had also paid around $100,000 of the deceased’s debts.
Around 2006, according to Ms Henry, the deceased disclosed to her that he owed a personal loan of $70,000 and a $20,000 credit card debt.
Ms Henry and the deceased had sought the advice of a financial adviser around 2009. The deceased still had to deal with his debt of about $90,000. The advice given was that the couple would be better off if Ms Henry retired from her employment, cashed in her superannuation and used that to pay off the deceased’s debt.
Ms Henry and the deceased agreed that she would retire. She had the option of receiving an ongoing annuity or getting a lump sum payment. She elected to receive a lump sum payment of $147,033.63. She then repaid the deceased’s debts amounting to about $90,000.
As a consequence, Ms Henry’s assets were reduced by about $90,000 for the benefit of the deceased, and Dianne forewent the opportunity to receive an ongoing annuity from the capital of her superannuation, or otherwise an opportunity to remain in employment.
“That does not, in any technical way, affect the value of the deceased’s notional estate, but it is a weighty consideration that the deceased’s will in substantial part gives back to Ms Henry that which during the deceased’s lifetime she gave to him on the basis of love and affection,” he said.
As Ms Henry will need to retain the retirement village unit for her home, the only practical course would be for the court to require the $175,000 to be paid out of Dianne’s superannuation funds. On the evidence, the amount in those superannuation funds is $441,000 in total, so the balance remaining after the payments are made would be $266,000.
“I do not consider that $266,000 is a substantial, or a sufficient amount, in the context of the matrimonial history of Dianne and the deceased, to provide Dianne with adequate income and security for the balance of her life,” he stated.
Justice Robb also pointed out that the deceased had made substantial provision for the plaintiffs during his lifetime, to the extent of providing them material assistance in each gaining a university education.
“All of the plaintiffs have reasonably sound employment prospects because of the university degrees that they have been awarded with the substantial assistance of the deceased,” he stated.
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.