In an article in the Financial Times in January 2005, Isabel Berwick explained how some tax avoidance schemes have been affected by recent legislation

She explained that two of the most popular schemes - known as Ingram schemes and Eversden schemes were deemed no longer valid and you should seek advice now if these have been set up for you.

This legislation has caused a lot of confusion and concern and has caused some people to question whether inheritance tax planning is likely to be worthwhile. The purpose of the legislation is to tax individuals on the value of assets which they previously owned but which they have given away during their lifetime while retaining a benefit from them.

However, Will planning is not about reserving a benefit in one's own lifetime and Isabel Berwick went on to write that the following is still good advice when setting out to minimise Inheritance Tax:

Nil-rate band discretionary will trust using an IOU.

Set up by a will using a nil rate band discretionary trust, the trust can be settled by a debt charged against the surviving spouse. This is done by a debt clause written into the will. This means that actual assets do not have to pass on the first death and the surviving spouse can use the said assets.

This does not wholly remove the threat of IHT but can save £105,200 of tax using current rates.

To do this, you need to sever the tenancy on joint assets (e g the family home). This means the assets do not automatically pass to the surviving spouse on death. You can use your will to distribute them tax efficiently and to those you want to receive them.

It, therefore, seems sensible for any couple with an estate over £275,000 to take advantage of both nil rate bands.

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