Earlier this year, we looked at Inheritance Tax (IHT) and the possible application of Business Property relief to cover business assets.

But while a person's business affairs may be in order, they must not forget they also have personal assets liable for IHT.

The IHT threshold is £275,000 (rising to £285,000 next month). Many people who have been successful in business will own property that is worth more.

Below the threshold, there is no IHT to pay, go above it, and you are charged at 40 per cent, not just on the value of your home, but on all your assets above the threshold.

So, an estate comprising a house worth £350,000 and a further £75,000 in other assets will pay IHT of £60,000.

Assets inherited by a surviving spouse are exempt from IHT. The disadvantage of this is that the two estates are amalgamated, so when the survivor dies IHT may have to be paid. The tax liability is only delayed.

The good news is there are ways to mitigate the liability. The first option is a lifetime trust. This is a vehicle by which you can transfer personal assets, such as property or cash, into a trust which is managed and invested by trustees, of which you can be one, for your chosen beneficiaries.

The only requirement is that the person making the transfer has to survive for no fewer than seven years after setting up the trust.

The person making the trust can specify what the trustees can and cannot invest in and how the capital and income can be spent.

A lifetime trust carries potential capital gains tax and income tax liability, although the IHT tax savings usually will be greater.

Will trusts are another option, and are particularly appropriate for married couples wishing to minimise their joint IHT liability in passing their estate on to their children, particularly when the home is the main asset.

They can split their assets into separate names then in their wills direct their personal assets, which could include a half share in the home, into a simple form of discretionary trust on death.

The surviving spouse can be included as a beneficiary and also be named as a trustee. When they die, their half of the estate may fall under the IHT threshold or at least reduce the IHT liability considerably.

We always recommend that people carry out a review of their financial position to ensure that potential IHT savings are made, and seek professional advice.

* Helen Biglin is a partner of Blackett Hart & Pratt in Darlington. For more information, contact her on (01325) 466794.