the easiest method to get the desired effect in my opinion would be to use post process blend weight and a timeline. the drawback here is that you need to setup everything beforehand and the transition is set. there is another method where you can set the blend based on the distance to the other actor but its been awhile so ill have to try to work it out again, im pretty sure its based on tick though.
anyways in the picture below you will see how i set it up. on overlap with another third person character (you could set this to whatever you like) it plays the timeline from the start. the timeline is just a simple 0-1 value over 1 second, and the update just sets the blend weight. on end overlap we do basically the same thing but reversing the process. now for this to work you will need to set the post process settings for the characters camera to your desired effect and you will also need to set the initial blend weight to 0.
