Inheritance tax

Do you want to leave your hard earned savings to the Government rather than to your family ?

The Nil Rate Band Inheritance Tax allowance for 2010/11 is £325,000 per person, this means for married couples it is £650,000.

All estates above these levels are taxed at 40%. Although property values may have dropped recently, many families will find that their combined asset values take their estates above these thresholds.

Even if you do have a spouse to inherit then this only puts off the time when tax will be payable because he or she will also pass away one day. It is worth doing some forward planning with a qualified adviser to decide whether it would be appropriate to gift some of your estate, perhaps to children or other relatives, during your lifetime; or possibly redirect assets up to the value of the nil rate band into a trust on death.

Protection policies can be written in Trust so that beneficiaries have the means of meeting the Inheritance Tax liability without selling the family assets.

Trusts can be used which still give the settlors control and access but put the capital outside their estate for IHT purposes.

Every case is different but there are solutions for most situations.

One thing is for sure with all forms of tax; if you do nothing the government will use its considerable powers to make sure a share of your hard earned wealth ends up in their coffers.

The Financial Services Authority does not regulate taxation and trust advice.