Intestate & Deed of Family Arrangement

S

sheldon

Guest
My uncle died intestate a year ago leaving behind a small farm. Since then the beneficiaries have been trying to put together a Deed of Family Arrangement. The Law of Succession would divide the farm 3 ways between his siblings - however our intention through a Deed of Family arrangement would be to bypass these siblings and divide the farm (or proceeds of) between the 6 nieces and nephews.

My question is: when a person dies intestate, does the Law of Succession automatically kick in and divide the estate accordingly and precipitate certain tax liabilities - and then should a Deed of Family Arrangement be activated to distribute the estate further - does this precipitate a second raft of Tax liabilites? Our understanding was that a Deed could replace Succession?
 
A deed cannot over rule the laws of intestacy, so yes there are going to be two potential tax liabilities here, the first the inheritance by the 3 children and secondly the gift by those children to their children in turn. However this is probably the most tax effective way any way since there is an inheritance from parent to child and then a gift from parent to child which is the biggest tax threshold, unless there is a gift from one of the three children to a nephew or niece?
 
can't the siblings not just disclaim their inheritances? would it not then pass to the nieces and nephews? a sibling has the same tax threshold as a niece or nephew so the tax would be the same as passing it to the siblings without any of the nieces or nephews having to use up their parental thresholds?
 
I have to agree with Vanilla, this would appear to be the most efficient use of the estate in tax terms.
 
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