Pension For Thai Wife

[peterpop]

I am a UK ex pat thinking about providing a secure income for my Thai wife in the event of my death.  Has anyone explored this subject?  Do UK based annuities work?

[Kwasaki]

9 minutes ago, peterpop said:

Do UK based annuities work?

It says that annuities often prove poor value and that savers should be able to make pension pots last, especially if they seek professional advice.

Protection against inflation is expensive and so most people choose a level annuity whose value erodes with time and may be worth little at old ages.

[peterpop]

What I meant was do UK based Annuity providers such as Legal and General or Prudential provide annuities for Thai citizens resident in Thailand.

[SantiSuk]

Try googling "can i buy a uk annuity for a "foreign" spouse" (quotes around foreign will ensure you get some foreign element). I tried it and found the first two pages might have given me some lateral ideas but nothing was hitting the subject right on the mark. I didn't have time to go through more than two pages though.

 

As a last resort you would have to consult a UK financial planning adviser or talk to a couple of annuity providers direct. For the latter I would choose Aviva, Axa and or whatever Norwich Union is now called.

[DaLa]

The UK state pension used to be transferable to your wife but that is no longer the case under the rules that changed about 2 years ago. Some of my private pensions will pass to my wife but that depends on the individual scheme.  I would take advice from an Ex-pat working with a Financial Organisation here as well as in the UK. Additionally looking at any tax advantages that a particular route would provide. However remember that investing here won't have the protection that the UK Financial Services are required to have. I'd also look at all the investment options, ie. property in Thailand that can provide inflation proof ( to a degree) monthly returns.  Finally, and almost initially I'd make sure you have a will that covers your (good)  intentions. 

 

Ex Financial Services (Prudential)

[peterpop]

Thanks for looking.  I am a tad surprised that this is not a well trodden path.  St James 'Place [Financial Advisors UK]  offer a service but I am not impressed.  Annuities are not a very efficient investment but they are secure [in UK].  What I really want is to buy a portfolio of Investment Trusts, only available on the London Stock Market, to provide income and the ability to draw down.  My wife is an accountant so maybe I have to teach her  DIY investing, should be fun. Problem is opening a cheap stock broking account that can do this locally.

[DaLa]

21 hours ago, peterpop said:

Thanks for looking.  I am a tad surprised that this is not a well trodden path.  St James 'Place [Financial Advisors UK]  offer a service but I am not impressed.  Annuities are not a very efficient investment but they are secure [in UK].  What I really want is to buy a portfolio of Investment Trusts, only available on the London Stock Market, to provide income and the ability to draw down.  My wife is an accountant so maybe I have to teach her  DIY investing, should be fun. Problem is opening a cheap stock broking account that can do this locally.

Peter, whilst St James Place are not by any means poor in terms of investment strategy and returns, I would suggest staying clear. Please look at my investment graph starting from the date of the C-19 crash.  Not only are St James lagging my other investments, they are the only ones that charge an up front fee on their Unit trusts. The difference between the buying price and selling prices is 5% and after that there are the annual fees.

[Srikcir]

Depending on your age and term of "investment", term life insurance is an option. Also investment in Thailand's SET (thru an account through your wife) is another approach as the elite 1% seems to sacrifice everything to keep it growing. 

[Andyfez]

These type of investments are completely foreign to a Thai wife.

Why not invest in some local cheap property in her name where she can control and understand it?

Collect a couple of 5,000 baht rents a month.....

Once you're gone how do you think she can handle or sell foreign investments? She can't. Too complicated - too much paperwork.....

Keep it simple.

[Thomas J]

On 12/21/2020 at 10:25 PM, peterpop said:

I am a UK ex pat thinking about providing a secure income for my Thai wife in the event of my death.  Has anyone explored this subject?  Do UK based annuities work?

Peterpop

 

I am a former head of a trust deparment for a major bank in the USA  There is probably nothing better for the salesperson of an insurance company than to sell you an annuity.  Huge commissions, typically large imbedded fees, and typically they run for a specific period of years and then the entire investment evaporates.  Here is what Dave Ramsey a nationally syndicated investment guide says about annuities.  To provide for your wife and potentially any children if you were worried about her being able to manage the money, I would set up a trust with a reputable bank.  Upon your death all of the assets would be then managed by the bank pursuant to your instructions to them and they would oversee the investment of those monies.  You could direct them to provide your wife with a specific amount of money each month ( just like an annuity) and/or give the Trustee Bank latitude to provide your wife with extra money as she requests it for specific expenses  like home repair, purchase of a vehicle, unusual medical expenses etc.  In effect the Trustee is making decisions on dispensing the money much as you would if you were still alive.  The typical standard is for the Trustee to be given the latitude to provide for the spouse keeping her living "in the same standard" as she did when you were still alive.  One additional benefit is that upon your wifes death the remaining assets go to any children and not the insurance company would sold you the annuity. 

https://www.daveramsey.com/blog/what-is-annuity

[peterpop]

23 minutes ago, Thomas J said:

Peterpop

 

I am a former head of a trust deparment for a major bank in the USA  There is probably nothing better for the salesperson of an insurance company than to sell you an annuity.  Huge commissions, typically large imbedded fees, and typically they run for a specific period of years and then the entire investment evaporates.  Here is what Dave Ramsey a nationally syndicated investment guide says about annuities.  To provide for your wife and potentially any children if you were worried about her being able to manage the money, I would set up a trust with a reputable bank.  Upon your death all of the assets would be then managed by the bank pursuant to your instructions to them and they would oversee the investment of those monies.  You could direct them to provide your wife with a specific amount of money each month ( just like an annuity) and/or give the Trustee Bank latitude to provide your wife with extra money as she requests it for specific expenses  like home repair, purchase of a vehicle, unusual medical expenses etc.  In effect the Trustee is making decisions on dispensing the money much as you would if you were still alive.  The typical standard is for the Trustee to be given the latitude to provide for the spouse keeping her living "in the same standard" as she did when you were still alive.  One additional benefit is that upon your wifes death the remaining assets go to any children and not the insurance company would sold you the annuity. 

https://www.daveramsey.com/blog/what-is-annuity

Now that is good advice.  Not sure about Thai banks but presumably a foreign bank of good standing will be able to do the same.  My wife has a UK bank account so maybe I should first look at UK banks.  Is this service expensive?  I do not mind paying a little because the alternatives such as annuities and so called Wealth Management companies are such poor value..

[peterpop]

50 minutes ago, Srikcir said:

Depending on your age and term of "investment", term life insurance is an option. Also investment in Thailand's SET (thru an account through your wife) is another approach as the elite 1% seems to sacrifice everything to keep it growing. 

Yes indeed.  I trade the SET via a TISCO broker.  It has provided an exciting ride.  I do not yet have faith even after 12 years of investing.  Some high interest paying stocks and REITs may be suitable for a pension, but can I trust someone to manage /assist my wife in the future?  I don't think so.

[Muhendis]

I have made preparations for my eventual demise by investing some of my "vast" fortune in a substantial amount of land for my wife which she can either rent out or sell when the time is right. As far as investing in the UK is concerned I use a unit trust platform investment company which is managed by my financial adviser. To do this I have a UK bank account which is a mandatory requirement. At an average of 12%/year things are not too bad. As for my wife inheriting the investments, that is not a problem however she will not be allowed to take over and continue to manage the investments because she does not have a UK bank account and she is not a UK citizen.

[SportRider]

On 12/21/2020 at 7:25 PM, peterpop said:

I am a UK ex pat thinking about providing a secure income for my Thai wife in the event of my death.  Has anyone explored this subject?  Do UK based annuities work?

 

Very briefly

1. Annuities - at current interest rates (bond yields) these are horrible - you'll pay a huge sum for a very modest income.  And capital is destroyed - nothing to pass on to the next generation.

2. Property - potentially a better idea, easily understood and managed by your survivor, and rental income likely to rise in lockstep with cost of living over the years ahead.  And something left to pass on.  NB to get a proper legal local Last Will done, and make sure your beneficiaries know of it's existence.

3. Insurance - payout from a life policy can be useful for providing a lump sum to your beneficiaries, but how to manage the money (and who) for providing income?  Depending on your age this may not be cost effective.

4. Investments - if you do leave behind a chunk of change, finding a trustworthy professional to manage it on behalf of your survivor can be problematic.  There are good advisors and poor advisors, in all companies, so shop around.  Retired folk should be in a well diversified portfolio of low cost investments (bond funds and equity index trackers), designed for income.

 

  

Four Rules for the Calm Investor (2nd Edition, Aug 2020).pdf

Edited December 23, 2020 by SportRider

[KhaoYai]

Totally different take on things:

 

Is your wife capable of dealing with the complexities of an investment and potential tax implications of a foreign based investment.  Even if she is, there is the potential for things to be very difficult to deal with 6000 miles away.  The usual investment choices in any country are difficult for a layman to understand, never mind someone who's first language is not English.  I've never looked at Thai investments but I doubt they are any simpler.

 

I'm intend building a business for my wife that she will be involved with from the start. If she screws that up in the future when I'm gone, at least I know I did my best for her.

 

Here's an idea for you:  A friend, sadly departed now, built some student apartments in Surin (28 I think), close to the unversity (obviously). Once completed, his wife took over the day to day running of them and they provided them both with a decent income (100k per month) and continue to provide for his wife now he's gone. 

 

It doesn't have to be student apartments, you could build workers accommodation etc.  The beauty of investing in property is that you retain your original investment which despite booms and busts - always rises in time and is not reliant on the performance of some remote fund manager etc.

 

With care it is also possible to provide a reasonable income from investing in 'normal' residential property although with the odd exceptions, the yields in Thailand are normally nowhere near what they are in the West for example.

 

If you go down this route, target the Thai market, the market for foreigners in Thailand can be very volatile. Location is everything as it is with property anywhere but also look to the future, are things in the area changing? Will that affect future yield and capital values etc.

 

I'd much rather have my money in property than anything else but there are the obvious high risk areas - Bangkok condos for one.

 

 

Edited December 23, 2020 by KhaoYai

[Thomas J]

3 hours ago, peterpop said:

Now that is good advice.  Not sure about Thai banks but presumably a foreign bank of good standing will be able to do the same.  My wife has a UK bank account so maybe I should first look at UK banks.  Is this service expensive?  I do not mind paying a little because the alternatives such as annuities and so called Wealth Management companies are such poor value..

peterpop

 

I would shop around.  I would first check with the U.K. banks.  I am not sure what sort of investments you have but certainly make sure that they are in a position to manage them or potentially liquidate them should the need arise.  In the USA Trust services generally run between 6/10 of 1% of assets managed to 1% of assets managed.  Most have minimum fees to prevent a lot of work on a very small account.  I have Trusts set up for my children.  When I pass away, my assets are titled in the name of the trust and I have named a bank as Trustee.  The kids get a percentage of the account each year and there are provisions that they can "borrow" additional money for some secured items such as a down payment on a home.  You will spend some money to establish the trust document with an attorney.  However you can stipulate in the document any wishes you have.  Some people have established with the second wife that she continues to get assets from the trust providing that she is not remarried or cohabiting with another.  If she does her portion is either removed or reduced with the money she loses going on to the kids.  This is to prevent a wasting of the assets by an person befriending the wife after your passing.  There is no limit to what provisions you can include.  You can instruct the Trustee how risky or risk adverse you wish the investments to be.  You can include a percentage or dollar amount to be distributed.  As mentioned a very common provision is to instruct the Trustee that the wife is to have access to provide a lifestyle consistent with her current standard of living.  So a car may be necessary to purchase but the Trustee can decide if that is a Toyota or a BMW keeping in mind what sort of lifestyle you have provided to her in the past. 

 

[Jenkins9039]

On 12/21/2020 at 10:25 PM, peterpop said:

I am a UK ex pat thinking about providing a secure income for my Thai wife in the event of my death.  Has anyone explored this subject?  Do UK based annuities work?

Establish a trust, buy property under that trust (offshore vehicle), rent said property out, pay local tax, split remaining it into maintenance, and residual income fund, monthly have that remaining fund pushed via Transferwise as an income/pension to her.

On your death, have a lawyer transfer the beneficiary of the trust into her name, if no children, then have so after a period of time, after your death the property can be disposed off.

Edited December 23, 2020 by Jenkins9039

[wavodavo]

14 hours ago, Andyfez said:

These type of investments are completely foreign to a Thai wife.

Why not invest in some local cheap property in her name where she can control and understand it?

Collect a couple of 5,000 baht rents a month.....

Once you're gone how do you think she can handle or sell foreign investments? She can't. Too complicated - too much paperwork.....

Keep it simple.

Yes all this financial paperwork sounds like too complicated for her.Just tell her she will have to get a job..

[Farang99]

On 12/22/2020 at 5:17 PM, DaLa said:

The UK state pension used to be transferable to your wife but that is no longer the case under the rules that changed about 2 years ago. Some of my private pensions will pass to my wife but that depends on the individual scheme.  I would take advice from an Ex-pat working with a Financial Organisation here as well as in the UK. Additionally looking at any tax advantages that a particular route would provide. However remember that investing here won't have the protection that the UK Financial Services are required to have. I'd also look at all the investment options, ie. property in Thailand that can provide inflation proof ( to a degree) monthly returns.  Finally, and almost initially I'd make sure you have a will that covers your (good)  intentions. 

 

Ex Financial Services (Prudential)

All the UK State pension provides for a wife is a lump sum of something like £1,000. My wife will get half my work pension, which is not a lot, but better than nothing - even more so if the £ ever recovers its correct value against the THB

[colinneil]

2 minutes ago, Farang99 said:

All the UK State pension provides for a wife is a lump sum of something like £1,000. My wife will get half my work pension, which is not a lot, but better than nothing - even more so if the £ ever recovers its correct value against the THB

A Thai wife gets nothing after her UK husband is dead, from UK state pension.

[Farang99]

1 hour ago, colinneil said:

A Thai wife gets nothing after her UK husband is dead, from UK state pension.

I spoke to DWP and received the statement about the lump sum.

[colinneil]

23 minutes ago, Farang99 said:

I spoke to DWP and received the statement about the lump sum.

How can you get such a statement, when the lump sum provision was stopped 2/3 years ago.?

Edited December 24, 2020 by colinneil

[DaLa]

1 hour ago, colinneil said:

How can you get such a statement, when the lump sum provision was stopped 2/3 years ago.?

I'm not 100% on this Colin, so you may be correct on the lump sum.  I do believe the t's and c's of UK state pension benefits changed a few years back (April 6th 2016). However I presume if you were of pensionable age prior to the rule changes then the benefits payable to the individual and their spouses remain in  place. (50% I believe is the spouses pension).

[prakhonchai nick]

May I advise on 2 matters.

 

1) Until 3 years ago a wife (Thai or otherwise) would receive a lump sum payment of £2,000 on the death of her husband + possible bereavement benefits which made a regular payment for any school children, or if the wife was over 45, with no children , a pension for 1 year. ALL DWP benefits for widows and children have now stopped for Thai widows.

 

2) When an annuity is taken out it is normally either just for the annuitant, or can include the wife, who will then receive up to 50% of the annuity on her husbands death. Many foreigners take out an annuity on retirement and if no wife at the time, they receive 100% monthly payment. If they then come to Thailand and marry (as many do) one cannot then add the wife to the annuity. Other alternatives exist to provide money for the wife after the husbands death.

[Thomas J]

17 hours ago, SportRider said:

Very briefly

1. Annuities - at current interest rates (bond yields) these are horrible - you'll pay a huge sum for a very modest income.  And capital is destroyed - nothing to pass on to the next generation.

2. Property - potentially a better idea, easily understood and managed by your survivor, and rental income likely to rise in lockstep with cost of living over the years ahead.  And something left to pass on.  NB to get a proper legal local Last Will done, and make sure your beneficiaries know of it's existence.

3. Insurance - payout from a life policy can be useful for providing a lump sum to your beneficiaries, but how to manage the money (and who) for providing income?  Depending on your age this may not be cost effective.

4. Investments - if you do leave behind a chunk of change, finding a trustworthy professional to manage it on behalf of your survivor can be problematic.  There are good advisors and poor advisors, in all companies, so shop around.  Retired folk should be in a well diversified portfolio of low cost investments (bond funds and equity index trackers), designed for income.

 

Sportrider  

 

Excellent recap.  

I would add that life insurance is likely for someone older not cost effective.  I would go further and add that bonds today are not just horrible they are a disaster waiting to happen. Investors get "paid" to take some risk. With bonds today you are not getting paid anything and yet the risk is that rates rise and the value of the bonds goes down.  In effect the worst of all worlds.  Taking a risk and not getting paid to take it.  Even Apple pays a .62% dividend yield that is likely to grown.  You can easily find many good utility stocks paying more than 3% and yes they can go down in value but they are over time likely to appreciate in value and have their dividends increased. 

Bottom line is that if you believe that the surviving spouse is not capable of managing the assets after your death, find a solid bank with an investment department to manage the assets for her.  Insurance is fine but the word is "insure"  you insure your home, you insure your car, you insure your health but placing money with an insurance company for investing is not insurance it is just plain expensive. Annuities have been and will continue to be lousy for those who purchased them and great for the agents and insurance companies who sell them. 

 

[Andy from Kent]

 

Would making a phone call to annuity providers get you the answer you seek?

 

[Leaver]

Don't you trust your wife to manage a lump sum sustainably?  

[Dagfinnur Traustason]

On 12/21/2020 at 4:25 PM, peterpop said:

I am a UK ex pat thinking about providing a secure income for my Thai wife in the event of my death.  Has anyone explored this subject?  Do UK based annuities work?

Teach her Swing Trading! ????

[Leaver]

On 12/24/2020 at 8:59 PM, Dagfinnur Traustason said:

Teach her Swing Trading! ????

I think she would be better sticking to gambling on card games.  ????