Discernible Intention to Revoke a Will

A testator’s intention to revoke an earlier Will must be discernible.

Gareth Hughes Roberts aged 53 died in February 2015 in Thailand of injuries sustained in a motorbike accident. Gareth was born in the United Kingdom but had been an Australian resident for 48 years, and owned assets in Australia and Thailand.

Gareth’s Australian estate valued at $375,816.72, comprises Australian bank accounts and bonds held in Australian share registries.

The Thai assets estimated to be worth $160,000 comprise a condominium, money in two Thai bank accounts, a car, and a motorcycle (which was destroyed in Gareth’s fatal road accident).

Gareth was divorced; did not have a domestic partner nor any children when he died leaving two wills. One Will (“The Australian Will”) was made using a pre-printed will form titled “Australian Legal Will Kit” in November 2012

The Australian Will, made in Port Broughton, meets the formalities of the Wills Act 1936 (SA) (“the Wills Act”). It contains a revocation clause, appoints Gareth’s sister Karen “executor of my estate in full”, and makes specific gifts to loved ones. Karen was the residual beneficiary of the estate. Gareth signed the will in the presence of two witnesses.

In March 2014, Gareth had a Will prepared by a Thai Lawyer in Thailand (“the Thai will”). The Thai will does not contain a general revocation clause and purports only to deal with property in Thailand.

The Thai Will appoints Ms Suwannee Ponmuang as administrator of the Thai estate assets and gifts her the condominium, monies held on deposit in two Thai bank accounts, the motorcycle and the car.

Karen sought an order that probate of the Australian Will be granted to her as the sole executor.

The Wills Act provides that a will executed in another country, where, the testator was a resident, at the time of its execution, or death, is valid if the formalities required for execution prescribed by the other country are complied with.

Karen submitted that Gareth resided permanently with her and her children at Port Broughton, and although he had a number of friends in Thailand had never expressed any intent to live there permanently or move away from South Australia; he held an Australian passport, a Medicare card, South Australian driver’s licence, and was listed on the Australian Electoral Roll. Importantly Gareth was never a permanent resident of Thailand,

Karen recalled a conversation that she had with Gareth in early 2014 that he was making a will in Thailand as he “wanted to distribute the Thai and Australian assets separately in these respective countries” he wished to leave his Thai assets exclusively to his partner; his Australian assets were to be dealt with as expressed in the Australian will.

The Court was satisfied that Gareth intended Karen to be the executor of the Australian will and Suwannee be the executor of the Thai will; agreeing that the evidence together with the terms of the Thai Will established that it was Gareth’s intention to make a Will in accordance with Thai law to dispose of his Thai assets exclusively and that he did not intend the Thai Will to revoke the Australian Will.

Importantly the Court was satisfied that Gareth was domiciled in Australia at the time of his execution of the Australian and Thai wills and at his death ad the Australian Will was a valid will in accordance with the Wills Act.

Karen is entitled to have the Australian Will admitted to probate with costs of the application paid out of Gareth’s Australian estate.

 

 

 

 

 

 

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Same-Sex​ Marriage, Divorce & Intestacy

The introduction of same-sex marriage in Australia has lead to same-sex couples having greater access to legal protections surrounding both financial and parenting matters.

Conversely, the amendments to Australia’s marriage act meant that a couple married under another jurisdiction’s laws was recognised under Australian law and so is their eligibility to file for divorce. In Australia, almost 1 in 3 marriages end in divorce, with the most common time for a marriage to end being following a period of 12 years.

Although same-sex marriage legislation is new in Australia, for some time it has been recognised in foreign jurisdictions; the Netherlands legalised same-sex marriage in 2001 therefore many same-sex couples in Australia have already been married for a significant period of time.

A Perth couple married under the Netherlands law at the Dutch embassy in Perth in 2015 were able to file for divorce under the amended law.

In Western Australia the Wills Act 1970 (WA) provides that a divorce order or annulment issued by the Family Court revokes a Will except where:

(a) a contrary intention appears in the will, or

(b) there is other evidence establishing such an intention.

Separation from a spouse does not invalidate a Will, because at law the marriage still exists.

As previously discussed a Will is revoked if you marry someone after making it unless the Will was made in contemplation of that marriage.

Legislation in most jurisdictions provides that Wills made in contemplation of marriage generally or in contemplation of a particular marriage are not revoked by the marriage of the will maker.

Courts have held that the definition of contemplation of marriage depends upon the facts of the case. Importantly Courts have held that the will maker must hold the intention that the will is to remain in effect after the marriage. Generally speaking, a Will is made in contemplation of marriage if the will-maker is

“intending proposing or having a marriage in mind as a contingency to be provided for as an end to be aimed at”

However, due to the previous marriage act that precluded same-sex marriage, it is unlikely that same-sex partners would have contemplated marriage when making their respective wills.

In 2013 the High Court of Australia held that the Australian Capital Territory’s Marriage Equality (Same Sex) Act 2013, could not operate concurrently with the federal Marriage Act 1961. The Australian Constitution gave federal Parliament the power to legislate with respect to same-sex marriage.

The Court held that “marriage” in s 51(xxi) of the Constitution refers to a consensual union formed between natural persons in accordance with legally prescribed requirements which is not only a union the law recognises as intended to endure and be terminable only in accordance with law but also a union to which the law accords a status affecting and defining mutual rights and obligations. Importantly the Court held “Marriage” in s 51(xxi) of the Constitution included a marriage between persons of the same sex.

Same-sex couples who wed in the ACT had their unions annulled following the High Court ruling against the laws.

Same-sex couples married when it was briefly legal in the ACT will have the $55 certificate fee waived if they were married previously under the ACT’s Marriage Equality (Same Sex) Act 2013.

As same-sex couples begin to consider the possibility of their union being legally recognised as marriage through legislation that came into effect as of 9 December 2017, they should check that their existing Will is valid; importantly does it include a clause stating it was made in contemplation of marriage.

If you and your partner married overseas, as a result of the same-sex marriage reforms, any same-sex marriage validly entered into overseas is now recognised in Australia. Including marriages under foreign law in Embassies or High Commissions in Australia. If your overseas marriage is now recognised as a marriage under Australian law, then you need to consider whether that legal change has affected the validity of your Will.

Similarly, if you have made an Enduring Power of Attorney, in some jurisdictions marriage revokes an earlier Enduring Power of Attorney that nominates anyone other than your spouse to be your attorney.

Only a valid Will can control what happens to your assets and how they are distributed to your loved ones.

A Will is a planning document. You should make and update your Will regularly think about the following when you start making your will:

  • Have you been divorced or separated? In some jurisdictions except where (a) a contrary intention appears in the will, or (b) there is other evidence establishing such an intention, divorce will revoke a will.
  • Have you married or started a new relationship? Unless a Will is made specifically in contemplation of an impending marriage an existing Will is automatically revoked by marriage
  • Have you or your beneficiaries had a new baby?
  • Have you bought or sold an asset such as an investment property?
  • Have you or any of your beneficiaries developed a health problem?
  • Have you or your beneficiaries had a business failure?
  • Have you gifted an asset or made a loan, to a family member?
  • If you own a business – has, a partner has retired, or a new partner been admitted?
  • Have you or your beneficiaries had a business failure?
  • Have you started a SMSF (self-managed superannuation fund)?
  • Have you transferred a major asset owned by you to a self-managed superannuation fund? 

Importantly have a Will – an intestate estate is never directed the way that you want it to and can compound an already difficult time for your loved ones.

 

 

 

Life Estate & the Doctrine of Acceleration

A beneficiary of a life interest created by a Will can surrender that interest at any time. Often occurring where a Will creates a number of successive interests and the life tenant motivated by the desire to allow the beneficiaries next in line to enjoy the income or capital of the estate, decides to disclaim or surrender their own interest under the Will. This is known as the doctrine of acceleration as the life interest that fails or ends earlier accelerating the interests of the remainder beneficiaries who then take their interest at that earlier time rather than on the death of the tenant for life.

However, where there is a contrary intention in the wording of the Will or a contingent interest acceleration will not occur.

Masha Lester died leaving a Will dated 21 November 1996 (“the Will”) appointing six separate executors and trustees; probate was granted to just three of these individuals: Masha’s son David, and David’s Sons Damien and Richard, who was later dismissed as an executor following legal action following which a settlement deed was executed in March 1999 (‘Settlement Deed’).

The Will

In the Will Masha:

(a) Appointed David, Damian, Richard, [Beneficiary A], [Beneficiary B] and [Beneficiary C] as Executors and Trustees (Clause 1).

(b) Bequeathed her one half right title and interest to the freehold property known as [the Toorak property] to David for life and after his death to form part of the residuary estate (Clause 4).

(c) Bequeathed the rest of the residue of the real and personal estate upon trust to sell and convert upon the following trusts (Clause 17):

(i) to pay debts, funeral and testamentary expenses (Clause 17.1);

(ii) as to all the rest to the residue (‘the residuary estate’) to pay the net annual income arising from the residuary estate:

  1. As to 50% to David for life.
  2. As to 10% to Damian for life.
  3. As to 10% to Richard for life.
  4. As to 10% to [Beneficiary A] for life.
  5. As to 10% to [Beneficiary B] for life.
  6. As to 10% to [Beneficiary C] for life. (Clause 17.2.1).

(iii) From the date of death of David, Damian, Richard, [Beneficiary A], [Beneficiary B] and [Beneficiary C] (‘the income beneficiaries’) to hold such part for the children of Damian being:

  1. [Alexander]
  2. [Hamish] (‘the children of Damian’)

until they attain 25 years and after they attain 25 years to pay such part of the net annual income as tenants in common in equal shares (Clause 17.2.2).

(iv) On the date of death of all the income beneficiaries to pay both capital of income to the children of Damian when they obtain 25 years as tenants in common in equal shares absolutely (Clause 17.2.3).

(v)In the event that the children of Damien predecease Masha, or die before attaining a vested interest in the deceased’s estate. Damian and Richard would then take the capital and income equally between them (Clause 18).

The Settlement Deed

Clause 4 of the Settlement Deed states:

4.(a) David, Damian and Richard in their capacity as Executors and Trustees jointly and severally covenant and agree to pay from the deceased estate the following amounts to:

(i) [Beneficiary A] the sum of [amount]

(ii) [Beneficiary B] the sum of [amount]

(iii) [Beneficiary C] the sum of [amount] (‘the sums’)

in full and final discharge of all their or either of their rights and entitlements pursuant to the Will within 3 months from these Terms of Settlement being approved by this Court.

(b) [Beneficiaries A, B, and C] covenant and agree that they assign and relinquish their rights to receive income pursuant to the Will, subject to the payment to them of the sums.

(c) David, Damian and Richard in their capacity as Executors and Trustees jointly and severally covenant and agree to pay [Beneficiaries A, B, and Cs’] solicitor/client costs incurred to this day including their costs of the mediation conducted on [date] 1999 and their costs in the implementation of these Terms.

Lester v Lester

Masha owned half the family home in Toorak (“the Toorak property”) with David owning the other half as tenants in common. At the time of Masha’s death, David and his wife were living in the Toorak Property.

David submitted that he was a life tenant with respect to the half share in the Toorak Property owned by the estate. David explained that the right to use the property extends for the duration of his life and does not terminate for instance if he ceased to live in the property.

Alternatively, even if the Court ruled that David didn’t have a complete life tenancy, he would still be a person having the powers of a tenant for life under the Settled Land Act 1958(Vic) (‘SLA’). The SLA provides that the right of a tenant for life in settled land must be something more than a personal right and amount to a legal, or equitable right to possession of the settled land.

Damian submitted that the Will needs to be interpreted independently of the SLA; did not confer a life interest in the Toorak Property but merely a personal right of residency to David. However, Damien concedes that David’s interest was sufficient to meet the requirements as a tenant for life pursuant to the SLA.

The Court concluded that the provision contained in the Will considered within the context of the entire Will so as to give effect to Masha’s testamentary intentions, meaning David held a life tenancy in the Toorak Property.

Similarly, the Court held the net sale proceeds of assets forming part of the estate (including any capital profit made on the sale of Masha’s half interest in the Toorak Property) to be enjoyed by those persons entitled to the income of the trust concerned to be considered capital.

Beneficiaries A, B and C have extinguished their entitlements to continuing income payments so their death will not trigger the entitlement of the great-grandsons (Hamish and Alexander) to income. This is because Beneficiaries A, B and C have no entitlement to receive income and so there is nothing upon which clause 17.2.2 can operate by way of gift over. That clause gives to Hamish and Alexander the income that was formerly being paid to one of the income beneficiaries and, since income is now only payable to Lester income beneficiaries, the death of Beneficiaries A, B or C is of no relevance and cannot trigger any gift over. That part of the capital which would have produced the 30 per cent income for Beneficiaries A, B and C has already been distributed hence there is no income to distribute.

 

 

 

 

 

 

 

Choupette – Karl Lagerfeld’s Cat may face a hefty tax bill

Karl Lagerfeld creative director of Chanel, Fendi and his own label, fashion designer, artist, photographer, and caricaturist; recognised for his signature style white hair, died recently of pancreatic cancer aged 85.

Choupette, Lagerfeld’s Birman cat who has nearly 300,000 followers on Instagram is reported to receive a portion of his $200 million estate. When asked in interviews if he’d leave his fortune to Choupette, Lagerfeld said:

                      “Among others, yes. Don’t worry, there is enough for everyone.”

Lagerfeld isn’t starting a new trend as reportedly Michael Jackson left $2 million for the care of his chimpanzee Bubbles. Fashion designer Alexander McQueen left 50,000 pounds to his three dogs; Hotelier Leona Helmsley and tobacco heiress Doris Duke established trust funds for the carers of their pets.

I have posted before of pets being left bequests; Tommaso, a 4-year-old former stray cat from Rome was left Maria Assunta’s (the widow of a property tycoon), entire estate worth approximately $13million, to be distributed via her former nurse, Stefania.

Interestingly Tommaso was reportedly the third most wealthy animal on the planet preceded by Kalu the chimp, who was left $80 million and Gunther IV, who inherited $372 million from his “dogfather” Gunther III— yes, a dog — who was the companion of an animal-loving German countess and multi-millionaire Karlotta Liebenstein.

Gunther IV has expensive tastes his diet includes steak and caviar, a personal maid and butler, a chauffeur-driven limousine, and is frequently relaxing beside a customized swimming pool at his home.

The reality is that Gunther IV’s wealth is controlled by a trust. Establishing a trust enables wealthy individuals to direct money for the care of their animals after they die.  A trustee controls the money and makes decisions as to what is to be paid for; a caretaker looks after the pet and asks the trustee to pay for the bills and related expenses; the Court makes sure that the trustee and caretaker are acting in the interests of the beneficiary and not using the funds for their own benefit.

A trust usually details what should happen once a pet dies, usually whatever money left over is distributed to named individuals or a charity, or if beneficiaries are not named absorbed back into the estate.

Lagerfeld could have either appointed a caretaker for Choupette as Maria Assunta did, or he could have set up a trust like Karlotta Liebenstein, to look after her. The trust deed could be drafted so that if Choupette died, the trust could be wound up and any remaining balance would go to another designated beneficiary or to charity.

As it stands France (which has unfavourable laws regarding trusts – as they are considered to be vehicles for tax evasion) as the principal place of residence for Lagerfeld and Choupette would get its share of inheritance tax which can be as high as 45%.

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Testamentary​ Freedom, Moral Obligation, and the Nominal Estate

Hubert Harris died in October 2015. Hubert was married to his second wife Jennifer for nearly 35 years; Jennifer was appointed sole executrix by Hubert’s last Will of December 2013.

Hubert’s son Andrew applied to the Court for family provision out of the estate or notional estate as the Court thinks ought to be made for the maintenance, education or advancement in life of an eligible person, having regard to the facts known to the Court at the time that the order is made, pursuant to s 59 of the Succession Act 2006 (NSW) (the Act).

Hubert’s estate was valued at a little under $8,000. However, a retirement village lease and superannuation benefits from which provision could be made were said to total some $600,000, almost entirely what is described in the Act as “notional estate”.

Halliday Shores Retirement Living Pty Ltd owns and operates the retirement village (“ retirement village”) where Hubert & Jennifer had a 99-year lease; and where Jennifer remains living, as lessee, of the balance of a 99-year lease, Hubert’s interest having passed on his death to Jennifer by survivorship.

The superannuation fund Hubert belonged to transferred the superannuation benefits to Jennifer in accordance with his binding death nomination and therefore does not form part of the estate.

At first instance, the Court held that a capable testator’s judgement as to who should benefit from their estate should be respected if it can be seen that the testator has duly considered the claims on the estate.

However, the Act interferes with the freedom of testamentary disposition; and courts have a duty to interfere with the Will if the provision made for an eligible applicant is less than adequate for his or her proper maintenance and advancement in life. The Court has to consider that the deceased was in a better position to determine what provision for a claimant’s maintenance and advancement in life is proper than when it is called on to determine that question months or years after the death of the person best able to give evidence on that question.

Accordingly, if the deceased was capable of giving due consideration to that question and did so, considerable weight should be given to the testator’s testamentary wishes in recognition of the better position in which the deceased was placed: subject to the qualification that the court’s determination under the Act be made having regard to the circumstances at the time the court is considering the application, rather than at the time of the deceased’s death or Will.

The Court believed that in the present case Hubert was faced with the moral obligation he owed to Jennifer to ensure she was secure in her retirement accommodation and protected against contingencies that might affect her in old age; balanced against the needs of his adult children.  However, it cannot be seriously suggested that community expectation would be that Hubert should put Jennifer in a position where she is required to vacate her villa in the retirement village (in which she feels secure and which is her home); nor did Andrew seek this arguing that the nominal estate was sufficient to cover his claim.

The Court believed that Hubert had made adequate provision for the proper maintenance, education, and advancement in life of Andrew and did not grant a family provision order. Similarly, the requirements in the Act for making a notional estate order as to costs were not met. Therefore, each party was ordered to pay its own costs in the matter.

Recently the Court of Appeal rejected Andrew’s challenge to the primary judge as being without substance. Agreeing that Jennifer’s circumstances were not as comfortable as Andrew suggested and an order for $100,000 would significantly diminish her welfare.

 

 

 

Intention an element in Revocation​

Richard Miruzzi died in March 2016, aged 87. Richard was twice married: both marriages ended in divorce. Between April 2011 and 22 December 2015 or thereabouts, Richard instructed his Solicitor on multiple occasions to draft or amend a will for him.

That pattern in the dealings between Richard and his solicitor was that Richard, from time to time, instructed his solicitor to prepare a will, Richard would attend to the execution of the document independently of his solicitor and the executed document was then returned to the solicitor for safekeeping.

In the months before his death, Richard had expressed a wish that he would leave his entire estate to a friend, Leonie Rigney.  However, in November 2015, Richard and Leonie had a falling out leading to Richard “destroying” what was believed to be all previous Wills gifting Leonie his estate; leaving the whole of his estate to

“The Children’s Hospital at Westmead for its general medical purposes”

In February 2016, Richard arranged an appointment to see his solicitor at his accountant’s office. The solicitor believed that it was “to execute the will” leaving his estate to the Children’s Hospital; the accountant, following discussions with Richard, believed he did not intend to sign the 2016 draft Will at the appointment.

Prior to executing the Will Richard was admitted to hospital after a fall, rapidly lost capacity and died.

Three weeks prior to his death, Richard and Leonie reconciled their relationship with Richard telling her that he wanted to make a Will leaving everything to her.

In July 2016, Richard’s solicitor found an original Will dated 17 August 2015 (the 2015 Will) in his office leaving everything to Leonie; who commenced proceedings to have the 2015 Will admitted to probate.

Importantly the Court has held that the document sought to be admitted to probate as an informal will must, itself, be considered in context;

“In appropriate circumstances, an inference may be drawn that the deceased was aware of the formalities required for a will. This may affect the question whether the Court should be satisfied that the deceased intended the informal document to be his or her will or an alteration to his or her will.”

The Children’s Hospital cross-claimed on the basis that the 2016 draft Will was an informal Will pursuant to section 8 of the Succession Act 2006 (NSW) could be admitted to probate.  It also argued the deceased destroyed a copy of the 2015 Will on the mistaken belief he had destroyed the original.

Richard’s former spouse argued that she was his de facto spouse at the date of death and neither document should be admitted to probate, as such she should receive the whole estate on intestacy.

Was the 2016 draft Will was an informal Will?

In order that the 2016 draft Will be admitted to probate,

“the deceased’s testamentary intention must be found not in any initial instructions given to his solicitor but in an intention manifested on or about 16 February 2016”. 

The Court held that the evidence suggested that although Richard requested the draft to be sent to him, he did not have a settled testamentary intention at that time.

Similarly making an appointment to execute the Will wasn’t evidence of Richard’s intention to benefit the Children’s Hospital over Leonie at that time either, as he had not executed the Will and he had reconciled with Leonie.

 “More probably than not, the deceased intended to make no new will unless and until he executed a formal will.  His established pattern was to make formal wills.”

The Court believed that Richard’s experience of attending to the execution of a multitude of wills independently of his solicitor provides a foundation for a finding that he was, at all material times, aware of a need for the execution of a formal will. There is, on the other hand, no foundation for attributing him with knowledge of the potential operation of section 8 of the Succession Act.

Had the 2015 Will been revoked?

The Court concluded that only one original version of the 2015 Will existed therefore, Richard had destroyed a photocopy of the 2015 Will as such it was insufficient for revocation; The legislation requires actual destruction of the will a “symbolic destruction” of a surrogate photocopy of a will is insufficient.

The failure to properly revoke a Will can be just as detrimental to an estate as the failure to properly execute a Will. An effective revocation requires the active destruction of the Will; the destruction of a photocopy of a will in the mistaken belief that it is the original is not an effective revocation.

 “The formalities of revocation of a will are no less important to due administration of an estate than those governing the making of a will.  The intention to make a will and the intention to revoke a will are paramount; but, in practical reality, some formality is required at each stage of estate administration so that the requisite intention can be conveniently verified.”

The Court held that the one certainty, in this case, was that the original 2015 Will found its way into the safekeeping of Richard’s solicitors firm and there survived the deceased unscathed.

The Court held that Richard had died without having revoked the 2015 Will and wasn’t satisfied that he intended the unexecuted draft will to operate as an informal Will, or intended that it operate with immediate effect at any time in advance of his prospective execution of a formal will.

 

 

 

 

Co-Executors can Lead to Conflict

A recent case is illustrative of the need for will makers taking care in naming the executor of there estate in order to avoid conflict and unnecessary delays and expense.

Robyn Wise died in April 2011 aged 60. Her son Shane Wise, one of her co-executors was granted probate in March 2013, of Robyn’s Will made in September 1998. Stephen Barry was living in a de facto relationship with Robyn at the time of her death and also a co-executor of her estate. Robyn’s Will left half the value of her home to her de facto spouse and the other half to her sons.

Robyn and Stephen had lived together as a couple for about 15 years since about 1996 until her death; in a home unit which was owned by Robyn estimated at $245,000 at her death, it was the major asset of the estate.

Stephen continued to reside at the property. He married in 2016 and his new wife and her children subsequently moved into the house and continued to live there.

The property remained registered in Robyn’s name and could not be sold or otherwise dealt with without both Stephen and Shane reaching an agreement. Protracted negotiations between them as to the sale of the coastal property or its purchase by the de facto spouse had failed.

Shane commenced proceedings in November 2017 seeking an order that Stephen be removed as co-executor claiming Stephen had prevented Robyn’s estate from being finalised; and sought an order that Stephen vacate the property in order that it be sold. Shane argued that by in continuing to reside in the property without an entitlement Stephen had wrongfully interfered with the estate’s property rights.

Stephen filed a cross-claim in the court contesting the will, seeking a family provision order that as Robyn’s defacto partner he should receive the whole of the coastal property because it had become his home over the years.

The court accepted that the due and proper administration of Robyn’s estate had been prevented by Stephen’s actions. As executor, Stephen was obliged to consider the interests of all the beneficiaries and just his own interests.

Importantly the court considered that as the proceedings were commenced and Shane and Stephen were unable to resolve the matter, there was no realistic expectation they would work together to finalise the estate.

In NSW unless the affected parties consent or otherwise without sufficient cause being shown for the delay a family provision claim must be commenced within 12 months after a deceased person’s death.

The court considered that as Stephen made the claim almost seven years after Robyn died and had sought legal advice from a number of solicitors during that period did not show sufficient cause. Similarly, the other beneficiaries would suffer prejudice if the court allowed the claim and the court believed that Stephen’s claim was not likely to succeed.

Although Stephen’s financial circumstances were not as strong as the other beneficiaries the court believed that as he had remained in occupation at the property, rent free, for approximately seven years, it was not satisfied that he was not adequately and properly provided for by Robyn’s will.