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A landmark ruling in the Grand Chamber of the European Court creates despair for any elderly siblings that lived together in a family home worth more than the inheritance tax threshold. The Burden sisters, aged 82 and 90, lost their fight to have been treated as married or a gay couple for tax purposes in a 15 to two vote by human rights judges in Strasbourg.

But it is not just a handful of elderly ladies who are affected. Increased house prices means it is not only elderly siblings living together. Many twenty-something siblings have bought property together because they just cannot afford to buy alone.

Since 1976, the sisters have written to the chancellor of the exchequer the day before every Budget pleading for recognition under the tax rules as a cohabiting couple.

When the UK Civil Partnership Act of 2004 first recognised gay couples for inheritance tax purposes, the sisters turned to the European Court of Human Rights.

They argued the act violated human rights convention articles outlawing discrimination and guaranteeing the protection of property.

In 2006, the Burdens lost the case by a four to three majority, although three members of the court described their inheritance tax plight as "awful" and "particularly striking".

Without further inheritance tax advice and based on current law and practice the surviving sibling will have to sell the four-bedroom property in Marlborough worth around £875,000 in order to pay the inheritance tax bill on the death of their sibling.

Assuming the house is jointly owned, the surviving sister would have to pay inheritance tax of 40 per cent on her half of the value of the property once the £312,000 threshold had been deducted.

This effectively means one sister would need to find around £50,000 in order to pay the inheritance tax bill and remain in the property.

From an adviser's perspective the family home is the most difficult issue to find an inheritance tax solution for but considering that about 40 per cent of the average person's net wealth is tied up in property it is possibly the most important.

One inheritance tax efficient solution is to trade down to a smaller property and 56 per cent of those aged more than 65 or more than 5.4m people live in homes with two or more spare rooms, according to the International Longevity Centre in July 2007.

However, this solution is not always acceptable as, understandably, many elderly people wish to stay in the family home, a property in which they are likely to have lived for many years and where their family may well have grown up.

Furthermore, the costs associated with selling and then buying again can amount to thousands, if not tens of thousands of pounds, which can make inheritance tax savings marginal.

In the past, equity release has been considered as a means of mitigating inheritance tax on the primary residence.

But clients who live for a long time will amass a debt in excess of the initial liability while a client who dies within the Inter Vivos period is still subject to inheritance tax. Furthermore, any investment used to match the debt would need more than 8 per cent a year return in order to repay it.

Alternatively, a whole of life policy combined with equity release can be used to extract funds.

In theory, this is a good idea for whole of life bonds are inheritance tax exempt. But, for most elderly clients, the premium required would be prohibitive and more than 50 per cent of people will outlive the point at which the cover exceeds the liability.

Robert Meyer is assistant director of specialist sales for Close Investments Limited