NO doubt many of us are familiar with the old saying that there are only two things that are certain in life: death and taxes.

It’s a matter for debate who actually came up with it, but certainly Benjamin Franklin, the polymath and one of the Founding Fathers of the United States of America is one of the most famous individuals to have used it.

What is not up for debate is that both of these matters are connected, especially when it comes to the subject of financial planning.

Specifically, it is the question of what happens to our wealth when we die.

And this is where the sometimes-vexed issue of inheritance tax (IHT) comes into play.

While it’s a fairly well-known tax, it can be complex and a bit of a minefield.

It may not be a priority for everyone, particularly for younger individuals, but it remains a critical element of financial planning.

As we embark on our working years, it’s understandable that other financial matters can take priority, such as planning a pension or obtaining and paying a mortgage.

We also need to cope with budgeting for all the normal bills and costs that we face every day.

But as we get older, hopefully we are accumulating some assets, and if we have a family, or plan to have one, the desire to leave something of substance to our loved ones begins to attract our attention.

Importantly, we would probably all like to do so without the Government taking more of it than it needs to. This is where IHT planning comes into its own.

There is an acceptance that, following a person’s death, his or her estate may have to pay some inheritance tax into the public purse.

Whether or not any has to be paid will depend on a number of factors, not least how much the estate is worth and who inherits it.

When it was introduced in 1986, IHT was designed with a view to lifetime giving.

The current exemptions and reliefs are not always well understood, and the complexity can deter people from making gifts as they believe, incorrectly, that the tax is payable when it may not necessarily need to be.

The level of exemptions have been frozen for many years, with the nil-rate band remaining the same at £325,000 since 2009, the annual exemption at £3,000 since 1981, small gifts exemption sitting at £250 since 1980 and three exemptions on gifts on anticipation or marriage or civil partnership staying at the same level since 1975.

There is clearly a whole range of exemptions, but this is just the tip of the iceberg in terms of all the rule and regulations.

The Government has recognised the complexity that exists within the system and changes have been proposed to try to make it easier to deal with.

Among these changes would be the replacement of some of the exemptions with an overall personal gifts allowance, allowing an individual to gift up to a fixed amount each year.

The small gifts exemption would, however, be retained for smaller amounts, such as gifts of up to £1,000.

There is also a suggestion that the gifting period be reduced from seven years to five years to encourage more regular gifting.

Currently the basic rule is that if a person survives for at least seven years after making a gift to an individual, then that gift will become exempt and therefore not subject to any IHT.

IHT, like many other taxes, is one that can cause a few headaches and ultimately can cost many thousands of pounds if the appropriate planning isn’t put in place.

Some estates are, of course, more complex than others, and there might not always be substantial assets available to pass on to the next generation.

However, whatever you have accumulated over your lifetime, should, as much as possible, be yours to pass on.

The Government, believe it or not, is keen for you to do so through the exemptions system.

Death and taxes may well be certainties, but taking the right advice as early as possible could mean your legacy living on, well after you have gone.

James MacKinnon is head of private client at Aberdein Considine.