Inheritance tax planning options

This can be a very effective way of IHT planning. It basically involves you giving money to trustees to buy a new bond or you gifting them an existing bond, then placing it in the relevant trust arrangement.

The value of the money or existing bond that you give will come out of your IHT estate after seven years but any growth on the bond will be out of your estate from day one.

We have lots of different trust arrangements available. Our 'Trusts decision tree leaflet' gives you more information on these and will point to the one that's best suited to your needs by asking you a few questions. You can also get more information on our trust range here

As there are a number of different trust arrangements available, which have different tax treatments, we strongly recommend you speak to a financial adviser for more details before you consider this option.

There are a number of exempt transfers or gifts that you can make that will immediately reduce your IHT liability. Some of them have different limits set on the amount of money you can transfer or give.

It's important that you keep a record of any transfers or gifts you make.

It may be that you've done all you can to reduce your potential liability and still find that a large bill is still to be paid when you die.

In these circumstances, you could consider a whole-of-life insurance plan and put it in trust. This would make sure that the money is available to pay the tax bill when you die. And this might be even more useful where you have a dependant still living in your home when you die. Having a life assurance plan in place will mean your dependant won't need to sell the house to pay the IHT bill.

This might sound easy, but is it? Firstly, spending your money means you have less to leave behind to your loved ones. But if the thought of going on a spending spree appeals to you, you must remember that anything you spend needs to be worth nothing once you've enjoyed it, for example holidays.

If you buy something that's worth money, it will be included in your estate for IHT purposes.