In our village which is called
Banu Bishr Qahtan Al-Janub,
people used to distribute blood money as follows:1- One third for the heirs.2- One third for the relatives.3- The last third is for the fund of the whole group.Is it permissible to do this?
Distributing blood money as it was mentioned in the question is not permissible. It should be distributed among the heirs of the murdered person exactly like inheritance. This should be done after repaying his debts and executing his bequest if he made one. If heirs willingly waive parts of their rights to the relatives or to the fund after the repayment of debts and carrying out of the bequest, it will be permissible as this is a righteous deed. Only sane, adult people can waive their rights. May Allah grant us success. May peace and blessings be upon our Prophet Muhammad, his family, and Companions.