Where married couples have combined assets worth more than £255,000 (the current inheritance tax threshold), inheritance tax is potentially payable on the second death. Inheritance tax is charged at 40%.

By preparing tax-efficient Wills, you can ensure that:

(i) Combined assets worth £510,000 are capable of passing free of inheritance tax

(ii) Following the first death the surviving spouse will have access to all of the combined assets.

As a result the sum which ultimately passes on the second death to your children or to other beneficiaries can be increased by up to £102,000 (which would otherwise have been paid in Inheritance tax)

This is achieved by ensuring that in your Wills, you leave the maximum sum, which can be left free of Inheritance Tax (the 'Nil Rate Band) to a Discretionary Trust.

This can ensure that the surviving spouse can have continued access to all of your combined assets by allowing the Trustees of the Discretionary Trust to either:

1. Make cash distributions from the Trust Fund to the surviving spouse as and when required.
2. Accept a 'promise of payment' from the surviving spouse at the outset which will itself then form the Trust Fund (rather than actually requiring payment of the Nil Rate Sum to set up the Trust).

If the 'promise of payment' method is used the Trustees can wait until after the surviving spouse's death before requiring repayment of this sum.

You can find out more about Discretionary Trust Wills and MAKE A DISCRETIONARY TRUST WILL ONLINE HERE