03/06/2019

It seems that along with dragons and Westeros, the idea that a person has substantial discretion in how to gift their estate on their death is a myth.

Those left underwhelmed by the conclusion of the final season of Game of Thrones need look no further than the recent ruling on Steinmetz v Shannon [2019] to satiate their appetites for drama. Despite an established history of tension between the appellant and the respondents, the key players in this production are Justices Pembroke (the trial judge) and White (along with his fellow judges on the appeal court).

Geoffrey Leslie Steinmetz is in hospital facing imminent life-threatening surgery and decides to draw up a new will. Between four properties, his share portfolio, his superannuation fund and a liquor licence, Mr Steinmetz’s distributable estate totals $6.65 million. Of great support to Mr Steinmetz is his second wife, Gayle Maria Warr Steinmetz; his daughter from his first marriage, Nicole Shannon; his son from his first marriage, James Steinmetz; and his godson, John Anthony Steinmetz.

Mr Steinmetz gives Matthew Shannon, a solicitor and the husband of Nicole Shannon, instructions over the phone. Mr Steinmetz’s son-in-law prepares the will in half an hour, races to Port Macquarie Hospital, and makes handwritten adjustments to the will under instruction from the testator. Despite the fact that the will is rushed and that he is in extremis, Mr Steinmetz includes the following clause with conviction:

“8. IT IS MY EXPRESS WISH that my Estate remains a whole for my children and grandchildren. I have drafted my Last Will and Testament in the above manner as I believe that it enables my wife to live comfortably for the rest of her life without having to dispose of the assets that I have worked my whole life for.”

Mrs Steinmetz is consulted for her approval, but later says that she was in no state to understand, let alone assess, the content of the document. Mr Steinmetz passes away in October 2016, approximately two weeks after executing his new will.

Probate is granted almost 12 months later. John Anthony Steinmetz receives a legacy of $15,000; Mrs Steinmetz receives the contents of the residence she shared with Mr Steinmetz; and the respondents – his children – receive the rest and residue of his Estate on the condition that they pay Mrs Steinmetz an indexed annuity of $52,000 for the rest of her life. Mrs Steinmetz, unhappy with this annuity, applies for a family provision order.

As he dismisses her claim, the trial judge says:

“38. I do not think that the plaintiff [Gayle Steinmetz] has established that the provision given to her in the will is not adequate for her proper maintenance or advancement in life… The plaintiff’s claim, and the presentation of her case, were largely influenced by the size of the estate and the relative lack of hardship that (it was assumed) would be caused if I removed $2 million from the defendants and gave it to the plaintiff. It is only one factor.”

Mrs Steinmetz appeals this decision. The Court of Appeal decides to set aside the orders and allows the appeal.

In May 2019 the appeal court finds that Mrs Steinmetz is not sufficiently provided for in the will. Regarding clause 8 of the will, the appeal court notes:

“93. A wish to preserve ‘the assets that I have worked my whole life for’ for the benefit of his children and grandchildren does not reflect a careful balancing of competing claims. The testator allowed this wish to preserve his estate intact to so dominate his decision-making as to fail to have sufficient regard to his obligations to his dutiful wife of 28 years.”

It is deemed inappropriate that Mrs Steinmetz should rely on the children of her deceased husband’s first marriage, with whom she has historical tensions, for quarterly payments to cover her cost of living. The appeal judges award Mrs Steinmetz a lump sum legacy of $1.75 million, less the annuity she has already received, as well as the costs of the first proceedings and appeal.

In refusing to alter the gifts in the will the trial judge said that the court should not amend such gifts lightly because society will come to think that a will is hardly worth the paper on which it is written and anyone with any kind of claim will be off to court.

The appeal court felt differently saying that it was not the role of the court to worry about such things but simply to interpret the legislation. In other words, we all have the right to access our courts, and if our claims are decided to be unmeritorious then they’ll be tossed out as needed.

We are already seeing the view that Justice Pembroke feared. Only recently a client of our firm asked for counsel’s opinion on whether he should prepare his will in a certain way, conscious of the prospect of a bad son claiming more than his share at the good son’s expense. Confidence in the immutability of wills is already waning in the community, prompted in no small way, no doubt, by the number of advertisements by law firms inviting beneficiaries in wills to consultations to discuss claims for an increased share of the estate pie.

The trial judge would seem to be arguing that it is unwise to establish precedents whereby wills are readily challenged. By doing so, we invite numerous claims, no matter how flimsy they may seem, at the expense of the deceased’s wishes.

The appeal court’s concern at the reliability of Mr Steinmetz’s wishes given his precarious health and seemingly panicked state, would seem well-founded but it would be concerning if the court’s decision rested on the fact that once an individual crosses some threshold of ill-health or difficulty, while still retaining mental and legal capacity, their declarations could no longer be trusted.

The trial judge effectively argued that the wishes of the deceased should be paramount and altered only in the event of substantial injustice whereas the appeal court’s view (and therefore the current law) is that the court can decide what a deceased’s obligations were to his family and amend his will accordingly.

Our advice to you when having a will prepared would be the same as our advice to the producers of Game of Thrones: plan ahead, and get the best writer.

For further information, please contact Townsends Business & Corporate Lawyers on (02) 8296 6222 or email info@townsendslaw.com.au to see how we can assist.