Recent figures have shown that even with the new inheritance tax (IHT) relief introduced in April, the Residence Nil Rate Band, the amount of IHT people pay is still set to increase, due in part to a growing economy and rising property prices, which serve to increase the personal wealth of a number of people.    

There are ways of reducing the amount of tax that an estate is likely to pay with lifetime planning, such as making gifts to family and friends in life instead of within a Will.  However, people should be aware that such gifts can still be subject to IHT, if the donor does not survive for a certain period thereafter.  That said, everybody has an annual exemption where up to £3,000 can be given without being liable to IHT and up to £250 can be given to any number of people under the small gift exemption.  It is also possible to make regular gifts out of surplus income.  

Obviously IHT planning is also of the utmost importance when drafting a Will to ensure that any IHT liability is minimal, if not non-existent.  Gifts to spouses, charities and the use of life interest trusts are amongst the ways of ensuring that family and friends are the main beneficiaries of an estate, and not the tax man.  

Discussing IHT planning options with a solicitor at this stage may cost a little more now, but save a lot in the long term.