Loan trusts and discounted gift schemes continue to remain popular vehicles for use in connection with inheritance tax planning. But both types of scheme provide less than complete access to funds for the investor and while many consider this to be a price worth paying, there are a significant number of would-be investors who, while wanting to minimise IHT, also need to retain access to all of their funds, all of the time.For these investors, avoiding the pre-owned assets tax (Poat) charge and the gift with reservation (GWR) provisions will not be possible on a lifetime gift but, of course, neither tax applies on death and everyone can leave up to 275,000 (after taking into account any transfers made within the seven years immediately preceding death) to persons other than a surviving spouse free of IHT. With will planning, if no lifetime gifts have been made, up to 275,000 could be left subject to a discretionary trust, whereby access for the surviving spouse to both capital and income can be secured by ensuring that a wide power of appointment is vested in the trustees, and by including the widow(er) within the class of beneficiaries who could benefit under the trust. The other main way an investor could make use of his nil rate band on death is to execute a stand-alone trust that takes effect immediately. During the investor’s lifetime, he or she has an interest in possession (a right to the income arising from the trust fund), with the trustees having the power to appoint capital to him or her should they regard this as being an appropriate course. Following the death of the investor, the trustees have three options. First, to distribute the trust fund immediately to the chosen beneficiaries; second, to continue to hold the trust fund subject to the existing trust; and finally, to create a further trust up to an amount equal to the nil rate band of IHT, with the balance of the trust fund being held for the absolute benefit of the surviving spouse – provided that this does not conflict with provisions under the investor’s will. With regards to the tax consequences of this trust, since the investor has an interest in possession and has retained the right to benefit from part or all of the capital of the trust fund, there will be no transfer of value on the creation of the trust, although the trust fund will be treated as being comprised in the investor’s estate for IHT purposes on his/her death. The trust can only be established by a sole investor, although married couples can establish mirror nil rate band probate trusts. As the investor will have an interest in possession in the trust fund there will be no charge to Poat and, with regards income tax, on the assumption that the under-lying investment of the trust is either a life insurance policy or a capital redemption policy, the chargeable events legislation will apply. Provided that the trust fund is only invested in a life insurance policy or a capital redemption policy, there should be no liability to capital gains tax. The discretionary will trust is probably the most well known option. Its major benefit is that the investment remains completely within the legal and beneficial ownership of the investor during their lifetime. The will can, of course, be changed at any time up until death. The key factors of the nil rate band probate trust are that it is self contained in that it is in place immediately and there is no need to obtain probate in respect of the investment (it is already in trust so the legal ownership is not with the investor). The nil rate band is used as the investor’s interest in possession terminates on death and the new post-death trust terms take effect. As ever, there is no right or wrong solution. For many financial advisers, the key determinants between a discretionary will trust and the nil rate band probate trust (given that the IHT outcome is substantially the same in either case) are likely to be the extent to which interaction with other professional advisers is possible (or desired) and the extent to which unfettered access to funds is required by the investor.