Britons paid £5.4bn in death duties last year and the state haul from the divisive 40pc duty is forecast to hit a record £6bn this year, before rising further still to £6.6bn in 2026. 

Booming house prices, frozen tax breaks and coronavirus deaths have caused a spike in the number of people who pay. In five years the number of families hit by the tax is expected to increase by around three fifths. 

However, there is a way to beat the taxman from beyond the grave. 

What is a ‘deed of variation’?

A deed of variation – or DOV – is a legal document that allows the beneficiaries of an estate – children, for example – to make changes to a will, in the name of the deceased, after their death.

This means that, if someone has not written their will in the most tax-efficient way, if they have inadvertently left someone out of their will, or if they have not written a will at all, the beneficiaries are able to redirect the money they stand to inherit to other parties. 

In the case that you are about to inherit a windfall that will take your own estate over £325,000 – the personal allowance above which 40pc IHT applies on your death – you can alter the deceased’s will so that money you stand to inherit passes directly to other beneficiaries, reducing or eliminating the amount of tax you would otherwise have to pay later.

For example, you may want to redirect some of the money you stand to inherit to charity, or to your grandchildren via discretionary trust for their benefit later on. 

If 10pc of an overall estate is gifted to charity, the rate of IHT paid is reduced by 4 percentage points to 36pc and all donations are tax free. 

You can gift up to £325,000 into a trust before any tax is due, as long as you survive the gift for seven years. This solution is sometimes used by grandparents who wish to contribute to private school fees.