How to avoid inheritance tax

Death and taxes may be life's only certainties, but there's no reason why you should just sit back and hand the taxman your inheritance. Inheritance tax (IHT) was originally conceived as a levy on the super-wealthy, but now kicks in at £263,000. The value of estates above that level is taxed at 40%, and Gordon Brown has ignored all pleas to whack up the threshold. Here's how to minimise the damage.

Trusts: Always get professional advice in order to find out what kind of discretionary trust might best meet your needs. For example, your assets can be put in trust for your children or grandchildren, which reduces your tax liability.

Home owners: If you own your home as tenants in common' rather than joint tenants' (as most people do) then when one partner dies, their half can be left directly to (say) the children. The surviving spouse's estate is reduced, but they can still live in the house.

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Gifts: You can give away £250 each year to as many people as you like. You can also give £3,000 a year to one or more recipients, and can roll over any unused allowance to the next tax year.

Seven-year rule: You can gift money or any other asset to anyone - and they won't count as part of your estate, so long as you survive at least seven years. (Taper relief may be available if you hold out for more than three years.)

Charity: Any donations left to charity, or even a political party, are tax-free.