1. The tax free exemption for an estate is £325,000. So it is only if your sister's estate was worth more than this figure that there would be any charge to Inheritance TAx should she die before the estate of your Mum is administered. This figure would include any inheritance she received from her Mum's estate. If there was the prospect of her dying before her Mum's estate was administered, the Deed of Arrangement would permit the assets she might inherit being inherited by someone else she deemed more suitable. In this way her potential legacy in her Mum's estate could, for instance, go directly to her children, for example, with only one set of Inheritance TAx being payable. However, like all things, a Deed of Arrangement has the downfall that should your sister live she will have got rid of her inheritance and no longer be entitled to it. So she should also consider this issue.