Karen Walsh: Deed of family arrangement may be answer in inheritance

Tenants in common means each party holds an individual, undivided interest.

Dear Karen,

My brother died last year without making a will.

He was a bachelor without children.

He left behind him four siblings, including myself.

He left a farm worth €1 million, and €400,000 in a bank account. I understand that each of us is entitled to a share in his estate, in equal shares.

I am a farmer and would like to buy the lands. Am I entitled to do that?

What is the procedure? Am I entitled to buy the others out? What advice do you have?

Dear Reader,

I am sorry to hear of your brother’s passing.

It is unfortunate that he did not leave a will.

This is a situation I encounter quite regularly.

He has died ‘intestate’ , that is, he died without leaving a valid will.

You are correct in that you and your three siblings have a share in his estate equally.

You and your siblings have a share as tenants in common in the lands.

‘Tenants in common’ means each party holds an individual, undivided interest in the property.

This means that each party has the right to sell or transfer ownership of his share.

All your siblings have an equal right to use the property. No party owns the lands or part of the lands exclusively.

Where tenants in common agree to divide the lands into individual areas in which each will have the exclusive right to a particular area, this is known as partition.

However, where co-owners do not agree, the matter will have to go to court.

One co-owner can effect a partition or court sale through an application to the courts without the need for consent or agreement from the other co-owners.

Section 55 of the Succession Act 1965 states that, “The personal representatives may, subject to the provisions of this section, appropriate any part of the estate of a deceased person in its actual condition or state of investment at the time of appropriation in or towards satisfaction of any share in the estate, whether settled or not, according to the respective rights of the persons interested in the estate”.

This means that the legal personal representative, the person appointed to administer your brother’s estate, has the power to vest assets in a certain beneficiary, in satisfaction of a beneficiary’s share in the estate.

However, the difficulty can arise where the asset that is appropriated is higher than the value of the other assets in the estate, and then people receive unequal inheritances.

Their entitlement needs to be discharged with monies from the estate.

In your case, the farm is worth €1 million and there is €400,000 in cash.

You have an entitlement to one quarter of the farm, which has a value of €250,000, and a quarter share of the cash, which is €100,000.

If you were to leave your siblings take your €100,000 cash in satisfaction of you taking the farm, there would be a shortfall of €650,000 for your siblings, and that is what you would need to buy out.

As there is not enough cash in the estate, you would have to enter into a deed of family arrangement, whereby you would try to buy out the others for cash consideration.

You and your siblings could enter into what is known as a ‘deed of family arrangement’.

It is a deed between family members, where the beneficiaries in the will, or the parties entitled on intestacy, decide between themselves how property is to be divided up.

Essentially, it is a deed where beneficiaries in an estate reach an agreement, and divide property in an estate, out of line with what is written in the will or in accordance with the rules of intestacy.

It goes without saying that to enter into a deed of family arrangement, there must be agreement between all parties.

One should always obtain tax advice in advance of signing a deed of family arrangement; it may have adverse tax consequences.

It is also important to be independently legally advised in advance of signing.


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