Deed of Family Arrangement

Parent has died and one child is executor of estate. That child wants to buy family home. All three children are agreed that he can. The value of the house is agreed at about €90K under market value (€375K v €460K), but in an effort to maintain good relations, the other two are happy with the lower figure. Executor now wants both to sign a deed of family arrangement, but I haven't any idea of what that is! There is also time pressure being applied to the other two children as parent died in June 2022.

Executor has had some advices from a tax consultant, but won't share with others and the solicitor acting for executor has told all to get independent legal advice.

Executor is pressurising the two others to sign this deed.

I'm one of the two, so what should I do? Should I just sign? Has anyone any experience?

Take Solicitor's guidance & get independent advice.

I'm always wary when some one starts to put pressure on.

"A deed of variation, sometimes called a deed of family arrangement, allows beneficiaries to make changes to their entitlement from a Will after the person has died. You might want to do this if you don't need all your inheritance and would like it to go to someone else. It can also help minimise inheritance tax."

I would definitely take independent legal advice.

How much does this legal advise cost??
I know for me, if I was bequeathing something with a value of €45k and was advised to get independent legal advise
I would at the very least expect the benefactor to be paying for the legal advise

Ravima said:

The value of the house is agreed at about €90K under market value (€375K v €460K),

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Hi Ravima

Ask to see the draft Deed of Arrangement. The Deed should specify clearly what you get.
I presume that you are agreeing to accept inheritances as follows:

Executor: €214k
you: €123k
Your other sibling : 123k


If it is not written clearly enough that you understand it fully, then, but only then, will you need legal advice.

Brendan

The only issue is whether the Executor is liable for CAT on your gift to her. I think she is, but that is not your problem.

Deed of Family Arrangement​

The beneficiaries may decide amongst themselves how a property is to be distributed and enter into a Deed of Family Arrangement. It is important to remember that these arrangements are effectively gifts between the beneficiaries and give rise to gift tax implications. A common example is where a parent dies and leaves a family home equally between say three children one of whom may be living in the house. Another child may be abroad and agrees to sell his share to the child living in the house and the third may be well off and agrees to gift his share. Stamp duty would be payable on the open market value of the gift and the sale ie of two thirds of the value of the property. There is no Capital Gains Tax if the Deed of family Arrangement is made within two years of death. Inheritance tax will be due on the inheritance from the deceased and on the gift from the sibling which is deemed to be an inheritance from the deceased. Gift tax may also be due on portion of the purchased share if the consideration paid is below market value.

So, you are both giving her a gift of about €30k each.
She will receive gifts of €60k from her siblings.
The first €32,500 is tax free.
The balance is subject to CAT at 33%

But I don't really think that you need to worry about this. That is her problem, and not yours.

Your entitlement under this will is €153k

You are entitled to receive gifts or inheritances up to €335k from your parents over the course of your life which would be free of tax.
So assuming you have not received €182k of gifts or inheritances already, you will be paying not Capital Acquisitions Tax.

Does the executor live in the family home?

Bronte said:

Does the executor live in the family home?

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Yes.

Therein lay a possible conflict as there was no rush to finalise matters!

Anyway, all sorted now. Thanks to all.