At the time of writing, many aspects of what Alistair Darling's pre-budget statement said are still unclear as the detailed legislation is yet to be issued and it is quite likely to be included in the Finance Bill issued in March or April 2008.

Many people will have already gathered from articles in the National Press, there have been two very significant amendments to the previous legislation, Inheritance Tax and Capital Gains Tax.

With regard to Inheritance Tax, for married couples and those in civil partnerships there has been a change to the extent that after the death of the first to die, leaving all the assets to the surviving spouse/partner, a double inheritance tax nil rate band will normally be available to exempt, at present rates, up to £600,000 of assets.

For those who have taken professional advice concerning wills, you probably already have within the will a Discretionary Will Trust arrangement in which event there will be few savings achieved from the new measures.

The question arising is, should you redraft your wills to exclude the discretionary will trusts? The answer to this is quite possibly, other than the fact that you are incurring an additional cost in so doing, but in a number of circumstances a trust may still be an important part of the overall financial planning for the affairs of a couple, as distinct from merely being an Inheritance Tax saving issue.

One example may be in a situation of second or subsequent marriages where some of the assets are specifically identified as ones which should pass to specific children maybe of the spouse who dies first.

This is achieved by providing for these matters in the listing of beneficiaries of a Discretionary Trust and/or with an appropriate Letter of Wishes for the trustees. That situation could be lost if no trust arrangement is set up. Trusts can also provide some protection for the capital held within them in terms of local authorities claiming contributions to care homes fees etc, which can be a 100 per cent tax, down to the threshold which, I believe, is £16,000 of assets remaining.

One of the advantages of removing any Discretionary Will Trust arrangements in existing wills is that the new draft provisions do seem to provide that on the death of the surviving spouse/partner that the further nil rate band is that in force at the date of the second death.

If Mr A had died in June 2001, leaving his nil rate band to a Discretionary Trust that would have been a sum of £242,000. If Mrs A dies in June 2008, there is an exemption applicable at that time of £312,000, i.e. £554,000 in total will be exempt.

If Mr A had not left a Discretionary Will Trust and the legislation is enacted as we anticipate, there would have been a £624,000 exemption, (i.e. 2 x £312,000) in respect of the assets in Mrs A's estate, which would then, in this example, incorporate the whole of their joint assets.

This does indicate an initial advantage from the new rules in respect of the aggregate Inheritance Tax paid in respect of Mr & Mrs A's estates, but it may not be as great as it first appears. If for example, an asset in Mr A's estate when he died, had a value of £150,000, and this passed into the Discretionary Trust set up under the will and that asset has risen in value to say £250,000 and the value of the other trust assets was then £110,000, i.e. total trust assets of £360,000, then the aggregate exempt assets would, including her nil rate band of £312,000 be £672,000.

The above is for general guidance only and no action should be taken without obtaining specific advice.

Andrew Kerr FCA, Pearson May, Chartered Accountants, Trowbridge, Chippenham and Bath