Whilst the Chancellor will like to think that the headlines in his Pre-Budget Report indicates some form of concession on inheritance tax for married couples and civil partners, the reality is that he has merely introduced proposals that the well advised had already put in place.

There is no great windfall as some have hailed the announcement to be; the tax free amounts that were referred to in the report were already available to those who had taken proper steps to put their estates in order.

Basically the new rules state if spouses or civil partners now simply leave everything to each other, on the first death the nil rate band is totally unused so that on the second death the then prevailing nil rate band can be doubled.

Those couples who had made tax saving Wills created what is known as discretionary trusts in their Wills so that when the first spouse or civil partner died, the amount that was effectively not charged to tax (the nil rate band – presently the first £300,000 of an individual’s assets) was preserved so that it could be used on each death meaning that on the second death at least £600,000 of the joint estate could be free of tax.

Many people have been asking me what they should do if they already had such Wills in place or if such Wills should still be contemplated following the Chancellor’s announcement.

The first thing to remember is that these proposals do not actually become law until the Finance Act 2008 comes into operation next year so the rules could still be changed, although I think that is unlikely. Tax saving Wills are still important for several reasons:-

■ If there are concerns over the cost of long term care, these schemes will go some way in addressing those concerns whilst acting as tax saving devices as well.

If the survivor is faced with the prospect of long term care, the implementation of the trust scheme in the Will of the first to die will mean that the survivor is classed as owing a debt to the first estate and, as such, this is deductible from the survivor’s assets when assessing capital for potential care charges.

This effectively ‘ring fences’ the nil rate band amount on the first death to be available for other members of the family.

■ The discretionary trust in a Will is also useful in cases of second marriages/relationships in that it ensures that the nil rate band amount is preserved for the children of a prior marriage.

■ Individuals with agricultural or business assets should ensure their Wills are drafted to utilise the reliefs on those properly and a nil rate band trust in the Will can ensure that the assets are kept separate so that the agricultural/business reliefs are not absorbed within the nil rate band trust.

It is worth remembering that these Wills are flexible which can be very useful and also that the law presently allows such trusts to be unravelled within the first two years after the first death. This would, thereby, allow the unused nil rate band on the first death to be transferred to the survivor under the new rules and effectively double the nil rate band available on the second death.

The announcement by the Chancellor means that many people who have discretionary trust Wills in place may feel that they do not need them anymore because if the survivor were to live for several or more years after the first death, the nil rate band on their death may be much higher and can effectively be doubled under the new rules if the Will of the first death did not utilise a discretionary trust and simply left everything to the surviving spouse or civil partner.

However, if you have the tax saving Will in place don’t panic, you can wait and see how things develop since matters such as these should be kept under constant review. If you have not made a tax saving Will there are still good reasons to do so and if you have not made a Will, then you should do straight away.

Unfortunately the Chancellor did not extend the proposed changes in the law to unmarried couples or siblings who may own high value properties together, but the discretionary trusts rules may still be appropriate for such people depending on individual circumstances. Inheritance tax is primarily a voluntary tax and with proper advice and planning, can still be minimised or removed from an estate all together.