Inheritance tax planning is advisable to make sure you avoid overypaying and to keep your finances in the best shape. Inheritance Tax is the tax that is paid on your 'estate'.

Broadly speaking inheritance tax is everything you own at the time of your death, less what you owe. Inheritance tax is also sometimes payable on assets you may have given away during your lifetime. Assets include things like property, possessions, money and investments. Not everyone pays Inheritance Tax on death. Inheritance tax only applies if the taxable value of your estate when you die is above £312,000 (2008-2009 tax year) and is only payable on the excess above this threshold. In addition, with effect from 9th October 2007, any portion of Nil Rate Band of £312,000 unused when a spouse or civil partner dies may be transferred to the surviving spouse or civil partner and used when calculating their liability for Inheritance Tax when they die

It is a shocking statistic but people in the UK waste around £1.1 billion through poor inheritance tax planning. Soaring rises in house prices over recent years, especially within the South East, will mean many of us will find our assets will exceed the £312,000 threshold for inheritance tax for 2008/2009. Inheritance Tax Planning is therefore no longer just a tax for the wealthy.

There are a number of areas to consider with regards to inheritance tax planning and ISB can advise which would apply to you.

• A life assurance policy can be taken out under trust to pay off the inheritance tax liability when due
• Any UK citizen can give away up to £3,000 to an individual each year as well as £250 to any number of people. (These are both annual exemptions for tax purposes)
• Gifts to charities, political parties and for the national or public benefit are exempt from inheritance tax and so too are certain wedding gifts

When planning your inheritance tax give away as many assets as possible - obviously only those that you are not going to need! Gifts made at least seven years before you die are not subject to inheritance tax (IHT). This means you can give away expensive assets to your family without a charge.

This means that you can give away £3,000 per annum under one allowance, £250 per recipient under another allowance and 'regular gifts from surplus income' under a third allowance and these are in addition to wedding gifts.

Should you die without the benefit of having made a will, unnecessary delays and financial costs could be incurred at a time when dependants are already faced with a number of challenges.

Although ISB do not offer a will writing service, we have a number of connections locally with well known solicitors who offer this service and can work with ISB to ensure every aspect of your situation is considered.

Once in place, your will should be reviewed regularly, particularly in light of major life changes such as remarriage, divorce, death or the birth of a child.

Comprehensive inheritance tax planning takes into account your individual strategy, plans and goals, which are unique to you. We work with you to establish these criteria and can work in partnership with your existing advisers such as your accountant, solicitor or tax adviser to create a detailed plan with you as the directing force.

It is our aim at ISB, to help you to achieve your objectives for your inheritance tax planning, whether it be making adjustments to your existing policies, or considering options which are more suitable to your current needs.