No-one thinking about planning their affairs should forget the simple trust.

Lawyers live in a slightly awkward time when it comes to trust planning. It has always been the case that some clients have feared trusts, not least because their advisers have failed to properly explain them. The advent of the transferable nil rate band, the mechanism by which one spouse can leave their estate to the other and also effectively bequeath them their inheritance tax allowance, caused many practitioners to do away with the use of the nil rate band discretionary trust on the basis that it was now unnecessary for inheritance tax mitigation – providing the law never changes back.

Additionally, HMRC raising the Income tax rate on trusts to 50 per cent has hardly helped, and the fear sparked by European disapproval of our trust regime is not welcome.

Any lawyer who concentrates only on tax advantages or disadvantages of trusts might be missing a trick or two. When it comes to inheritance tax planning, a trust is still your ‘flexible friend’ for a variety of reasons, but the other advantages of trust use are crucial. Think about this; could anyone to whom you want to leave assets go bankrupt or get divorced in the future? Would you not prefer to ensure that anything you leave behind is protected for generations of your family, rather than left at the whims of a trustee in bankruptcy, for example? Do you want to ensure that any children to whom you leave anything has their inheritance managed properly? Do you have to consider the interests of children from your first marriage, and your spouse from a subsequent union? Consider a trust for asset protection matters as well as tax mitigation.

And as for any issues around income tax, a good independent financial adviser should be working closely with your lawyer or other adviser on trust matters. Make sure that they can work in tandem to get the best results.

UK trust law has developed over the best part of 1,000 years and practitioners have moved on in the same way as medical practitioners, from blunt instruments to precision tools.

The future of the use of trusts in mitigating inheritance tax may be under threat, perhaps where lump sums are paid out from life policies or pensions, but never be led to believe that the trust is dead – it’s a wonderful tool in planning for your family’s financial future.

* James Hall is an associate at Clarke Willmott