Family Provisions Act - Your will, not your wishes

[troposa]

Hi All

I thought I let you all in on what may happens if you choose to not distribute your estate evenly amongst your "family"

Allow me to provide you with some background on the FPA (Family Provisions Act).

The Act began its life in New Zealand as the "Family Protection Act 1908". The propose was the protection of widows and children from wills that would leave them destitute.
An example often cited is of a father that leaves his entire estate to the gentleman's club when he had a wife and young children that needed support.

One solution to this problem was to limit the freedom of how a will could distributed in an estate to 1/3 to the widow 1/3 to the children and 1/3 free for the deceased as they wish. This was seen to be interfering with the freedom to distribute their wealth as they saw fit. As a compromise solution the Family Protection Act 1908 came into effect in New Zealand and later spread to Australia. It’s now fundamentally the same in all states in Australia.

The law effectively says if you could do better in life by getting more from the estate of a partner ex-partner, parent, grandparent or sibling. The court will change the will to even out any unfairness.

Here is a fictional example of what we see in the courts today.

The deceased has two children, child 1 works and saves and places themselves well for their future. Child 2 has a problem holding onto money and tends to waste what they do get. Child 2 has also fallen out with their parent as they resent their advice and have not been in contact for 20 years. Both children are both in their 40's. In the will, the parent leaves $300,000 to child 1 and $20,000 to child 2, saying in the will that "I give child 2 only $20,000 as they have abandoned me and have shown that to give them more would be a waste as they are not good with money"
Here are the probable outcomes if child 2 decides to contest the will.

Mediation:
Child 1 will be advised by their lawyers that child 2 has a good chance of winning in court and it would be best to pay them off. Child 1 pays child 2 $100,000 plus $15,000 for child 2's lawyers, plus $15,000 for the estate lawyers, leaving child 1 with $170,000.

Court:
It is two years since the parent’s death. Child 2 receives $100,000 because child 1 is in less need. Child 1 has to pay the legal cost of child 2 which are now $40,000 child 1's costs are $45,000 child 1 receives $115,000,
Only a fraction of claims go to the Supreme Court as the majority of estates will be extorted for large sums, (eg 20-30% of small estates less than $500K, and 10-15% of larger estates), in an attempt to mitigate large legal costs.

Do you think this is the way you want your estate to be distributed when you die?
Do you think we should have a fixed distribution system?
Do you think the courts are best placed to decide what you should have put in your will?
Do you think you should have freedom to distribute your wealth as you wish?