What is a Widow Worth?

What might a widow be worth? This question was considered in the recent NSW Court of Appeal case of Steinmetz v Shannon (2019) NSWCA 114. The case stands as a reminder of the factors the Court will take into account when reviewing the adequacy of financial provision for a widow under the terms of a Will.

The principal issue was whether an annuity was adequate provision for the widow’s proper maintenance and advancement in life. The Court of Appeal allowed the appeal by Mrs Gayle Steinmetz, a widow, from a decision by the NSW Supreme Court. That Court had dismissed her claim under section 59 of the Succession Act 2006 (NSW) for further financial provision. However, the Court of Appeal decided that the annuity of $52000 per annum provided in her husband’s Will was not sufficient and ordered that she receive a legacy of $1.75 million.

Issues for Discussion

Under s59 of the Succession Act, the Court has the power to interfere with a Will if the financial provision for an eligible person (such as a spouse or child) is considered inadequate for their proper maintenance or advancement in life.  The Steinmetz case is important as it considered how the Court might try to balance the competing requirements of the deceased's testamentary freedom. For example, freedom of individuals to dispose of their property on death as they see fit, compared to the legal requirements for adequate financial provision to be made for those persons who are eligible.

Facts of the Case

Geoffrey Steinmetz's estate amounted to a substantial $6.8 million.  It consisted of real estate, a superannuation policy and a liquor store. He had married his second wife Gayle in 2011, after being in a de facto relationship since 1988.  She had provided him with full-time care for 15 years because of his ill-health.

In his last Will, he left Gayle an indexed annuity of $52000 pa for the remainder of her life, to be paid in quarterly instalments.  The residue was left to the two adult children from his first marriage.

This last Will was made quickly with telephoned instructions. The deceased was about to undergo surgery which he feared he might not survive. Instructions were given to the deceased's son-in-law, Matthew Shannon, who was a solicitor. The Will appointed the children of the first marriage as executors and trustees of the Will. A while later Geoffrey Steinmetz passed away.

The deceased and his widow had been largely financially independent of each other. They resided in separate homes. That said, the deceased would fund some mutual expenses, entertainment and holidays. At the time of the appeal, the widow's assets (including her home) amounted to approximately $700000, with an income of $70000 and expenses of $40000 pa.

The trial judge had dismissed the widow's claim for further provision on the basis of that the annuity was adequate. He concluded that the annuity would enable the widow to continue living in the same house, as she had during her relationship with the deceased, and maintain her lifestyle. Deciding that the annuity was sufficient, he stated:

She will not be in a position to live extravagantly, but she did not do so when married. She will not have the benefits, the security, the holidays, the comforts and the additional financial advantages that she enjoyed during her relationship with the deceased. But as a matter of law, should she be entitled to expect more?

The Court of Appeal disagreed. The annuity of $52000 pa was not considered adequate provision. Nor were the proposed arrangements with the stepchildren (the respondents):

… .to leave a 65 year old widow reliant for the rest of her life on quarterly payments by the children of the deceased husband’s first marriage, rather than placing her in control of her own resources, is in this day and age not an appropriate form of provision for a widow who is well and truly capable of managing her own affairs and when there have been tensions between her and at least the first respondent. However reliable the respondents might be, this form of provision effectively obliges her to have an ongoing relationship with them, and to trust them to perform the obligation, and does not afford her the independence and self-reliance which, according to today’s community standards, a widow should have. It is not only rigid and paternalistic but demeaning and controlling. 

What Does It Mean?

The case usefully summarises the principles attaching to widows’ claims in family provision cases. It provides a useful guideline to understanding how a Court will interpret them:

• A principal concern here was not to leave the widow at the mercy of the children from the first marriage and that an ongoing relationship was not appropriate. It is important to consider the interaction between the parties and not just whether the provision is adequate for each party.

• The concept of "moral duty" remains the measure of what is "adequate and proper provision". While concepts of what the community holds as acceptable are relevant, the principle of a "moral duty" attaching to a Will should take priority over "community standards" in regard to whether the will-maker has fulfilled their duty to a claimant.

• The concept of adequate provision is not limited to the provision of financial necessities. Financial need should not be interpreted narrowly as the "need is not (just) for the bread and butter of life but for a little bit of the cheese or jam".

• Section 59 should be applied in consideration of the particular pertaining circumstances. This can include the size of the estate, the competing claims of the beneficiaries, and the applicant's conduct and relationship with the deceased. Here, this meant the care provided by the wife to her ailing husband, the substantial size of the estate being more than sufficient to meet competing claims, and a desire of the widow to relocate for medical reasons.

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