Your estate will be exempt from IHT if it is a) all left to your spouse, b) left to charity or c) is below the tax threshold at the date of death and providing any gifts made in the 7 years prior to death do not create a taxable estate when added on to the date of death value of the free estate (everything in deceased's sole name).

If the above do not apply, then the estate may attract IHT if reliefs such as Business Property Relief or Agricultural Property Relief do not apply. IHT is taxed at 40% on the value of assets in excess of the tax threshold and, as from this tax year, is now £300,000.

If you leave your whole estate to your spouse, you are not utilising your tax free allowance available on death. Therefore your spouse's estate may have a larger tax bill to pay on their death.

If you own your house jointly as joint tenants it passes by survivorship. You can sever the joint tenancy so that you own the house as tenants in common in equal shares. Your share can then be given to someone else under the terms of the will. However problems may arise if you reserve rights of occupation for your spouse in your will.

You must ensure that you make provision for anyone who can claim financial dependency on you in your will. If not, or the provision is deemed inadequate, they can make a claim under the 1975 Inheritance Tax within certain time limits.

If you want to ensure your spouse has the ability to have access to your estate, but also utilise your tax allowance you can create within a will a Nil Rate Band Discretionary Will Trust. Quite often, people are concerned that they do not have sufficient assets in their own right to obtain the full benefit from Nil Rate Band Discretionary Will Trust. They can utilise their share of the house, and as their spouse should be a potential beneficiary of the trust, s/he can live in it, providing the trustees agree.

If there is a loan back clause, the survivor can have the half share vested in them, subject to an equitable charge if the trustees so agree. This is beneficial for CGT purposes. In effect, a debt is created so on death, as it is your net estate which is taxed, you deduct the sums owing to the trust, deduct your own annual exemption and then tax is paid on the rest (if anything).

Enduring Powers of Attorney (EPA)

The Mental Capacity Act 2005 takes effect in April of this year. Existing EPA's remain unaffected. The can still be executed up until 30th September 2007. The new regime creates Lasting Powers of Attorney, one to deal with finances and one to deal with personal matters. However there are more stringent rules applying to these, and more costs involved. Our advice currently is to execute an EPA under the existing legislation.

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