IHT Planning 4th July 2013 Use Lifetime Trusts to Save Inheritance Tax. With the government confirming in the last Budget that the current inheritance tax nil rate band of £325,000 will be frozen until 2018, more and more people will find the taxman taking a sizeable slice of their estate on death. Making gifts during your lifetime is one solution – you can gift assets of up to the value of the nil rate band every seven years. For many though, the thought of passing large sums of cash or valuable assets to their children at an early age may start alarm bells ringing. Lifetime trusts solve this problem, by removing these assets from your estate, whilst enabling you to retain control over how the assets and income arising are handled. As trustee, you can safeguard the assets from gold-diggers or wayward offspring, whilst being able to provide income and or capital to the beneficiaries as and when required. Trusts themselves are subject to inheritance tax every ten years, and also when capital is paid out. The charge every 10 years works out at a maximum of 6%, and with each trust retaining its nil rate band exemption, the savings compared with the 40% charge on death can be substantial. There are clear incentives to beginning inheritance tax planning as early as possible – leaving it too late may mean leaving less to your loved ones.