Thai Will And A Uk Will

[chiang mai]

Having been whipped to near death by all respondents over my views on censorship of the Sweeney Todd movie (separate thread) I've decided to move on and to try to bottom an issue I'm trying to resolve currently - but just to be perfectly clear the emergence of this thread has absolutely nothing to do with that beating!

I have a long standing UK will in effect but am now in the process of trying to put in place a Thai will, possibly in tandem with my UK will and possibly not - the logistics of this are not clear to me. Questions arising are:

1) As a UK passport holder and resident of Thailand for the past four years I presume UK law will regard me a domiciled in Thailand since I rarely visit the UK and am not required to file UK tax returns. If that is true is my estate still subject to Inheritance Tax - yes, my assets exceed the single persons threshold.

2) If I amend my UK will to reflect a Thai beneficiary as well as UK beneficiaries how is the administration of that will managed, by the UK or by Thailand.

For information at this point: all assets are mostly cash instruments that are mostly held offshore UK.

3) I have heard that a Thai will (in Thai) is required to pass on assets in Thailand and that a UK will alone is not sufficient.

My objectives in revising my will are a) avoid IHT, ensure speedy and cost free disbursement of assets to beneficiaries in the UK and Thailand.

I feel certain other members must have gone through all of this before hence any pointers will be gratefully received.

Thanks

[yorkman]

Having been whipped to near death by all respondents over my views on censorship of the Sweeney Todd movie (separate thread) I've decided to move on and to try to bottom an issue I'm trying to resolve currently - but just to be perfectly clear the emergence of this thread has absolutely nothing to do with that beating!

Ok, if you are sure.

I have been around this one, and I hope somebody can come up with a more definitive answer. As I have totally failed to get a watertight answer to this either in Thailand or the UK, only opinions, this is what I have done. I will hastily rearrange if anybody comes up with something better, and, just as importantly, can cite cases.

I am making the, perhaps wild, assumption that I can execute a will in both countries, and ne'er the twain will meet. I really cannot see how they can if nobody tells. Executors are family at both ends.

I have reduced my assets, as far as the UK can see, to below the current Inheritance Tax limit and it will surely rise unless I go under a Saamlaw tomorrow. If you want your UK beneficiaries to come into more than that, then I dont really see how you can avoid some tax liability at some point without blatent tax avoidance.

[Boyblue]

Having been whipped to near death by all respondents over my views on censorship of the Sweeney Todd movie (separate thread) I've decided to move on and to try to bottom an issue I'm trying to resolve currently - but just to be perfectly clear the emergence of this thread has absolutely nothing to do with that beating!

I have a long standing UK will in effect but am now in the process of trying to put in place a Thai will, possibly in tandem with my UK will and possibly not - the logistics of this are not clear to me. Questions arising are:

1) As a UK passport holder and resident of Thailand for the past four years I presume UK law will regard me a domiciled in Thailand since I rarely visit the UK and am not required to file UK tax returns. If that is true is my estate still subject to Inheritance Tax - yes, my assets exceed the single persons threshold.

2) If I amend my UK will to reflect a Thai beneficiary as well as UK beneficiaries how is the administration of that will managed, by the UK or by Thailand.

For information at this point: all assets are mostly cash instruments that are mostly held offshore UK.

3) I have heard that a Thai will (in Thai) is required to pass on assets in Thailand and that a UK will alone is not sufficient.

My objectives in revising my will are a) avoid IHT, ensure speedy and cost free disbursement of assets to beneficiaries in the UK and Thailand.

I feel certain other members must have gone through all of this before hence any pointers will be gratefully received.

Thanks

Hi i am a UK Will Writer and member of th "Society of Will Writers and Estate Planners" i am based in the UK and Koh Samui/Krabi

1. for tax purposes you would be classed as Domiciled in Thailand. but on death any estate passed to a UK domiciled person would incur 40% inheritance tax on estate over £300,000.

2. A Will is only valid in the country were the asset exists, so basicly you need a Thai Will and a UK Will, but it is not a good idea to show the existance of each will in the other.

3. your Uk will deals with uk assets and your Thai Will deals with Thai assets.

4. where UK and Thai Beneficiaries exist, it is up to your chosen Executors to make any gifts as requested in your Will.

we as a company can write both Uk and Thai wills, dealing with assets and Wills seperately, the only people who need to know of the existance of the Wills are your executors. We hold all original Wills for clients and notify the executors of this fact, therefore the executor just needs to contact us in the event of your demise. we then send the originals to the executors. Only an original unmarked Will is valid.

Edited February 3, 2008 by expatwills

[yorkman]

Hi i am a UK Will Writer and member of th "Society of Will Writers and Estate Planners" i am based in the UK and Koh Samui/Krabi

1. for tax purposes you would be classed as Domiciled in Thailand. but on death any estate passed to a UK domiciled person would incur 40% inheritance tax on estate over £300,000.

2. A Will is only valid in the country were the asset exists, so basicly you need a Thai Will and a UK Will, but it is not a good idea to show the existance of each will in the other.

3. your Uk will deals with uk assets and your Thai Will deals with Thai assets.

4. where UK and Thai Beneficiaries exist, it is up to your chosen Executors to make any gifts as requested in your Will.

we as a company can write both Uk and Thai wills, dealing with assets and Wills seperately, the only people who need to know of the existance of the Wills are your executors. We hold all original Wills for clients and notify the executors of this fact, therefore the executor just needs to contact us in the event of your demise. we then send the originals to the executors. Only an original unmarked Will is valid.

All life is here, peering under a bridge

[GuestHouse]

I'm not sure what a 'Will Writer' is I employed a lawyer and an accountant specializing in estate management.

Points to note: Becoming non tax Domiciled in the UK is extremely difficult, the advice above that you would be considered domiciled in Thailand is very shaky and I would advise you consult a UK law firm that also offers services for estate (tax) management, many do.

The advice I had from my Lawyer was that wills can act across borders where no other will exists overseas, but that it is usually up to a court in other jurisdiction to rule on whether the will is accepted (That is they often are accepted where no alternative offshore will exists, but there are no firm guarantees).

The advice was therefore that I should have a will in the each of the countries I own assets and (contrary to the advice above) each will should reference the other will(s). For example the UK will should clearly state that it deals with assets and estate in the UK and that assets and estate in Thailand shall is dealt with by a Thai will. (and visa versa).

With regards to avoiding tax. I'd think very carefully about this if I where you. The tax free allowance for death taxes is GBP300K and set to rise again next year. Moving assets out of the safe haven of the UK to avoid tax is taking a huge risk, especially if moving your assets to the very lax legal protections that Thailand offers.

I also think it is unnecessary - GBP300K is a fairly substantial figure, certainly enough to provide financial security for you in your old age, doubly so if you also have a pension. Gifting your wealth above that figure is an effective means of avoiding tax (there are time limits and yearly maximums to consider) but you can do all of this in the very secure framework of the UK's legal system and in particular you can make use of the UK's trust laws.

I think you would be very ill advised to start taking money to Thailand to avoid death duties if you haven't first had professional advice on alternative tax strategies available in the UK. - and by professional advice I mean a reputable UK tax specialist, and absolutely not advice from within Thailand.

Apart from the tax advantages, UK trusts offer a very secure means of providing your loved ones with a long term income (or periodic payments) something not available in Thailand and something to be considered against the risks of doling out a huge sum of money in one easy lump (easy because its ripe for plucking).

Traps to watch out for when making a will.

There are two ways to pay for a will. Up front when you get it written - ie a fixed fee, and as Service charge (ie as a percentage of your estate).

Make sure when you get a will written that there are no service charges and that you are making a one off payment - Service charged will can be HUGELY expensive.

If you are making a will in Thailand get the translation translated back to English by ANOther law firm of YOUR CHOOSING.

Maintenance and keeping of your will

Keep your will updated, if there are any life changes, marriage, new born children, grandchildren etc revisit your will as failing to do so can have consequences you did not intend.

My wills are with my lawyers, neither charge me for the service, I have also informed all my major beneficiaries of where my wills are an who are my executors.

Each of my wills has two Executors the second standing in where the first is unable - my trusted friends, like me are getting older too.

Oh and add something in your will as a thank you for your executor. I've done the job myself for a dear friend, it is a thankless task and one that involves a great deal of running around and can also involve dealing with a bit of strife too. So spare a thought.

And don't forget

Add an attachment to your will that lists all your bank accounts, insurances, share accounts, the names and addresses of your beneficiaries - all the stuff that the Executor and the lawyers are going to need to sort out your affairs.

Edited February 3, 2008 by GuestHouse

[yorkman]

I'm not sure what a 'Will Writer' is I employed a lawyer and an accountant specializing in estate management.

Points to note: Becoming non tax Domiciled in the UK is extremely difficult, the advice above that you would be considered domiciled in Thailand is very shaky and I would advise you consult a UK law firm that also offers services for estate (tax) management, many do.

The advice I had from my Lawyer was that wills can act across borders where no other will exists overseas, but that it is usually up to a court in other jurisdiction to rule on whether the will is accepted (That is they often are accepted where no alternative offshore will exists, but there are no firm guarantees).

The advice was therefore that I should have a will in the each of the countries I own assets and (contrary to the advice above) each will should reference the other will(s). For example the UK will should clearly state that it deals with assets and estate in the UK and that assets and estate in Thailand shall is dealt with by a Thai will. (and visa versa).

With regards to avoiding tax. I'd think very carefully about this if I where you. The tax free allowance for death taxes is GBP300K and set to rise again next year. Moving assets out of the safe haven of the UK to avoid tax is taking a huge risk, especially if moving your assets to the very lax legal protections that Thailand offers.

I also think it is unnecessary - GBP300K is a fairly substantial figure, certainly enough to provide financial security for you in your old age, doubly so if you also have a pension. Gifting your wealth above that figure is an effective means of avoiding tax (there are time limits and yearly maximums to consider) but you can do all of this in the very secure framework of the UK's legal system and in particular you can make use of the UK's trust laws.

Apart from the tax advantages, UK trusts offer a very secure means of providing your loved ones with a long term income (or periodic payments) something not available in Thailand and something to be considered against the risks of doling out a huge sum of money in one easy lump (easy because its ripe for plucking).

Traps to watch out for when making a will.

There are two ways to pay for a will. Up front when you get it written - ie a fixed fee, and as Service charge (ie as a percentage of your estate).

Make sure when you get a will written that there are no service charges and that you are making a one off payment.

If you are making a will in Thailand get the translation translated back to English by ANOther law firm of YOUR CHOOSING.

Maintenance and keeping of your will

Keep your will updated, if there are any life changes, marriage, new born children, grandchildren etc revisit your will as failing to do so can have consequences you did not intend.

My wills are with my lawyers, neither charge me for the service, I have also informed all my major beneficiaries of where my wills are an who are my executors.

Each of my wills has two Executors the second standing in where the first is unable - my trusted friends, like me are getting older too.

Oh and add something in your will as a thank you for your executor. I've done the job myself for a dear friend, it is a thankless task and one that involves a great deal of running around and can also involve dealing with a bit of strife too. So spare a thought.

And don't forget

Add an attachment to your will that lists all your bank accounts, insurances, share accounts, the names and addresses of your beneficiaries - all the stuff that the Executor and the lawyers are going to need to sort out your affairs.

Err OK GH, and you have some excellent points there. A long post.

Yet, you still dont know exactly what the OP should do? Is this true? If you do, give exact advice, with case law to back it up.

This is a situation which is not backed up by international law, inter country agreements or anything else as far as I can tell. If anybody can give a definitive view, backed up by proof, it is welcome.

Otherwise I am going for the dodgy arrangement "Respectable Financial Advisors" are yet another oxymoron

[GuestHouse]

"Respectable Financial Advisors" are yet another oxymoron

The term I used was reputable.

If the answer I gave goes against what you yourself have done, well fair enough, each to their own.

But like I say, it is possible and legal to avoid inheritance tax in the UK without taking the risk of moving wealth to Thailand, if you are not aware of that and estate planning wasn't a consideration when trying to avoid tax then, again fair enough.

As for knowing what the OP should do... well I given him some things to think about and my advice would always be 'Take Legal and tax Advice in the UK'.

Many law firms offer both these services and at reasonable costs.

Edited February 3, 2008 by GuestHouse

[yorkman]

You did say "Reputable" GH, as opposed to "Respectable", but both words are interchangeable in the murky and unqualified world of financial advisors. Are you qualified as such? I am certainly not, nor would care to be. It ranks along with Lawyers and Estate Agents who need to be the main event in an Issan Rocket festival IMHO.

Now heck, chaing mai, they are all out of their cupboards with advice.

Make of this what you will (no pun intended)

Edited February 3, 2008 by yorkman

[chiang mai]

Having been whipped to near death by all respondents over my views on censorship of the Sweeney Todd movie (separate thread) I've decided to move on and to try to bottom an issue I'm trying to resolve currently - but just to be perfectly clear the emergence of this thread has absolutely nothing to do with that beating!

Ok, if you are sure.

I have been around this one, and I hope somebody can come up with a more definitive answer. As I have totally failed to get a watertight answer to this either in Thailand or the UK, only opinions, this is what I have done. I will hastily rearrange if anybody comes up with something better, and, just as importantly, can cite cases.

I am making the, perhaps wild, assumption that I can execute a will in both countries, and ne'er the twain will meet. I really cannot see how they can if nobody tells. Executors are family at both ends.

I have reduced my assets, as far as the UK can see, to below the current Inheritance Tax limit and it will surely rise unless I go under a Saamlaw tomorrow. If you want your UK beneficiaries to come into more than that, then I dont really see how you can avoid some tax liability at some point without blatent tax avoidance.

This is pretty much where I am at present and like you I have been unable to get a firm view on all of this from three separate UK lawyers. I strongly suspect that two separate wills in the same name converging on UK offshore funds will attract attention hence I am not convinced this is going to be sucessful.

[chiang mai]

I'm not sure what a 'Will Writer' is I employed a lawyer and an accountant specializing in estate management.

Points to note: Becoming non tax Domiciled in the UK is extremely difficult, the advice above that you would be considered domiciled in Thailand is very shaky and I would advise you consult a UK law firm that also offers services for estate (tax) management, many do.

The advice I had from my Lawyer was that wills can act across borders where no other will exists overseas, but that it is usually up to a court in other jurisdiction to rule on whether the will is accepted (That is they often are accepted where no alternative offshore will exists, but there are no firm guarantees).

The advice was therefore that I should have a will in the each of the countries I own assets and (contrary to the advice above) each will should reference the other will(s). For example the UK will should clearly state that it deals with assets and estate in the UK and that assets and estate in Thailand shall is dealt with by a Thai will. (and visa versa).

With regards to avoiding tax. I'd think very carefully about this if I where you. The tax free allowance for death taxes is GBP300K and set to rise again next year. Moving assets out of the safe haven of the UK to avoid tax is taking a huge risk, especially if moving your assets to the very lax legal protections that Thailand offers.

I also think it is unnecessary - GBP300K is a fairly substantial figure, certainly enough to provide financial security for you in your old age, doubly so if you also have a pension. Gifting your wealth above that figure is an effective means of avoiding tax (there are time limits and yearly maximums to consider) but you can do all of this in the very secure framework of the UK's legal system and in particular you can make use of the UK's trust laws.

I think you would be very ill advised to start taking money to Thailand to avoid death duties if you haven't first had professional advice on alternative tax strategies available in the UK. - and by professional advice I mean a reputable UK tax specialist, and absolutely not advice from within Thailand.

Apart from the tax advantages, UK trusts offer a very secure means of providing your loved ones with a long term income (or periodic payments) something not available in Thailand and something to be considered against the risks of doling out a huge sum of money in one easy lump (easy because its ripe for plucking).

Traps to watch out for when making a will.

There are two ways to pay for a will. Up front when you get it written - ie a fixed fee, and as Service charge (ie as a percentage of your estate).

Make sure when you get a will written that there are no service charges and that you are making a one off payment - Service charged will can be HUGELY expensive.

If you are making a will in Thailand get the translation translated back to English by ANOther law firm of YOUR CHOOSING.

Maintenance and keeping of your will

Keep your will updated, if there are any life changes, marriage, new born children, grandchildren etc revisit your will as failing to do so can have consequences you did not intend.

My wills are with my lawyers, neither charge me for the service, I have also informed all my major beneficiaries of where my wills are an who are my executors.

Each of my wills has two Executors the second standing in where the first is unable - my trusted friends, like me are getting older too.

Oh and add something in your will as a thank you for your executor. I've done the job myself for a dear friend, it is a thankless task and one that involves a great deal of running around and can also involve dealing with a bit of strife too. So spare a thought.

And don't forget

Add an attachment to your will that lists all your bank accounts, insurances, share accounts, the names and addresses of your beneficiaries - all the stuff that the Executor and the lawyers are going to need to sort out your affairs.

Thanks GH for a complete reply, there are indeed some useful and valid pointers in your post. I have consulted with three separate UK law firms on this subject and all seem to want to deal with the UK aspects only. The largest of the firms I have talked to, my mainstay for legal advice in the UK have said they will pass the matter for opinion and research but this will likely cost in the region of £500 per hour hence I have passed on the idea for the moment. My niece is a newly qualified Solicitor and she has agreed to find out what she can on the subject so I live in hope that I may be able to post a complete answer on the subject shortly.

[marshbags]

I have 2 seperate legally written wills.

One deals soley with the U.K. and has a specific reference to benefit who i,ve named in the U.K and goes on to say in legal terms my wife does not benefit from my U.K. assets.

It also states that my wife inherits all assets in Thailand.

I have a will in Thailand to compliment this and it gives my wife first claim to assets there only, along with a private pension that she gets on my demise.

Should anything befall her, my daughter Thai / English then inherits it all.

marshbags

P.S.

Checked and legally binding ( by legitimate lawyers ), both ends, just in case anyone starts nit picking at it.

Especially in the U.K. as i purposely keep the bulk of my estate there for obvious reasons / possible flaws in the Thai end of things

P.P.S.

In the U.K. it is up to you who get,s what and who doesn,t, just make sure you use a reputable U.K. lawyer to word it as you intend it, this in turn makes sure your wishes are carried out exactly as you wish and they cannot be legally challenged by mis interpretation as your lawyer should have already taken care of this.

Edited February 4, 2008 by marshbags

[chiang mai]

I have 2 seperate legally written wills.

One deals soley with the U.K. and has a specific reference to benefit who i,ve named in the U.K and goes on to say in legal terms my wife does not benefit from my U.K. assets.

It also states that my wife inherits all assets in Thailand.

I have a will in Thailand to compliment this and it gives my wife first claim to assets there only, along with a private pension that she gets on my demise.

Should anything befall her, my daughter Thai / English then inherits it all.

marshbags

P.S.

Checked and legally binding ( by legitimate lawyers ), both ends, just in case anyone starts nit picking at it.

Especially in the U.K. as i purposely keep the bulk of my estate there for obvious reasons / possible flaws in the Thai end of things

P.P.S.

In the U.K. it is up to you who get,s what and who doesn,t, just make sure you use a reputable U.K. lawyer to word it as you intend it, this in turn makes sure your wishes are carried out exactly as you wish and they cannot be legally challenged by mis interpretation as your lawyer should have already taken care of this.

Thanks for that Marshbags, it all seems sensible. But it's still not clear to me how IHT would be handled, given the two wills and given an assumption that your assets exceed the IHT threshold. If your UK will details assets less than IHT threshold but references a Thai will where, when assets are totaled, exceeds the IHT threshold, surely the UK probate process would view your entire estate value for IHT purposes and not solely your UK will description?

[GuestHouse]

Marshbags,

You stated

I have a will in Thailand to compliment this and it gives my wife first claim to assets there only, along with a private pension that she gets on my demise.

If you have included your Private Pension in your will you may have created a tax problem. Pensions are held in trust and hence seperate to your taxable estate. Including a pension in a will risks your pension fund being added to your estate.

If you have indeed included your pension in your will, talk to your pension provider and ask for advice on how to deal with your pension. Their advice willl almost certainly be 'Complete a Statement of Wishes with the Pension Provider and remove the Pension from your will'.

----

A point on moving assets off shore to avoid tax - Anyone doing this needs to be very careful that they are not committing the crime of 'Tax Evation'. I note a few comments above about wills being kept seperate and out of the knowledge of the tax man. Fine if you are sure you are not committing tax evation (in which case no need for the secrecy). But when we ask people to be our executors we may be asking that they too break the tax laws. Again good reason for legal advice and again I don't see the necessity to move assets off shore in order to avoid death duties.

[chiang mai]

Marshbags,

You stated

I have a will in Thailand to compliment this and it gives my wife first claim to assets there only, along with a private pension that she gets on my demise.

If you have included your Private Pension in your will you may have created a tax problem. Pensions are held in trust and hence seperate to your taxable estate. Including a pension in a will risks your pension fund being added to your estate.

If you have indeed included your pension in your will, talk to your pension provider and ask for advice on how to deal with your pension. Their advice willl almost certainly be 'Complete a Statement of Wishes with the Pension Provider and remove the Pension from your will'.

----

A point on moving assets off shore to avoid tax - Anyone doing this needs to be very careful that they are not committing the crime of 'Tax Evation'. I note a few comments above about wills being kept seperate and out of the knowledge of the tax man. Fine if you are sure you are not committing tax evation (in which case no need for the secrecy). But when we ask people to be our executors we may be asking that they too break the tax laws. Again good reason for legal advice and again I don't see the necessity to move assets off shore in order to avoid death duties.

Just by way of clarification GH: all my investment assets are based offshore UK, i.e. IOM, Gurnsey etc and have been so for the past fifteen years. You are correct in that it would be foolish to move such assets into Thailand, just to escape IHT but I don't think anyone here has suggested that.

Edited February 4, 2008 by chiang mai

[yorkman]

I have 2 seperate legally written wills.

One deals soley with the U.K. and has a specific reference to benefit who i,ve named in the U.K and goes on to say in legal terms my wife does not benefit from my U.K. assets.

It also states that my wife inherits all assets in Thailand.

I have a will in Thailand to compliment this and it gives my wife first claim to assets there only, along with a private pension that she gets on my demise.

.............

That would seem to work Marshbags. I need to make the UK will a little more sophisticated then, and all is well.

I did not read your post as saying there was any mention of your pension in your Thai will, but I suppose it can be read 2 ways.

Thanks

[marshbags]

Marshbags,

You stated

I have a will in Thailand to compliment this and it gives my wife first claim to assets there only, along with a private pension that she gets on my demise.

If you have included your Private Pension in your will you may have created a tax problem. Pensions are held in trust and hence seperate to your taxable estate. Including a pension in a will risks your pension fund being added to your estate.

If you have indeed included your pension in your will, talk to your pension provider and ask for advice on how to deal with your pension. Their advice willl almost certainly be 'Complete a Statement of Wishes with the Pension Provider and remove the Pension from your will'.

----

A point on moving assets off shore to avoid tax - Anyone doing this needs to be very careful that they are not committing the crime of 'Tax Evation'. I note a few comments above about wills being kept seperate and out of the knowledge of the tax man. Fine if you are sure you are not committing tax evation (in which case no need for the secrecy). But when we ask people to be our executors we may be asking that they too break the tax laws. Again good reason for legal advice and again I don't see the necessity to move assets off shore in order to avoid death duties.

Apologies Guesthouse and everyone, i am guilty of misleading you regarding my pension.

It is not added / listed in the will and should have been in a seperate sentence / paragraph.

My U.K. lawyer was on the ball regarding the legalities of the will and it,s possible interpretation in regard to my wishes and how they neeeded to be written down.

As he said to me, using an experienced lawyer is a must and while we may think our wishes are clear, they are open to all sorts of loopholes and weaknesses that can be exploited by others.

Ref. C.Mai

Any IH Tax issues along with things of a similar nature should be discussed by your lawyer as you draught the will out together, and advice given accordingly / as required, as they may come up.

It is well worth the fee to ensure your wishes are as you mean them to be, IMHO.

They kept the original for their vaults and provided me with a signed duplicate. ( They made me a a signed copy for my records back home. )

marshbags

Thanks to the OP for starting a very useful and important thread off by the way.

G.H., as always is well informed and his point regarding the Complete a Statement of Wishes advice is spot on, as i am happy to say, i completed one of these soon after i got officially married at the amphurs office, some time ago.

Edited February 4, 2008 by marshbags

[astral]

I am not sure where Will Writer gets his information, but it is NOT correct.

A will probated in the UK will definitely be accepted by the Thai courts for the release of assets in Thailand.

If you have assets over the current limit of £300,000 you should look at plans

to manage your estate to reduce/eliminate the requirement to pay Inheritance Tax.

If the OP cares to PM me I will be happy to share the approach I have taken.

[GuestHouse]

Apologies Guesthouse and everyone, i am guilty of misleading you regarding my pension.

It is not added / listed in the will and should have been in a seperate sentence / paragraph.

No apology necessary, I was just concerned that you may not have been aware of the issue of wills and and trusts with respect to Pensions. It can be a costly mistake so I thought I'd better mention it just incase.

[mrbojangles]

Thanks to the OP for starting a very useful and important thread off by the way.

I concur. And thanks to all of you other guys for sharing your experiences.

I think i have been in denial and believed i would live forever. Although i'm not really old, I really need to shift my butt on this and get a will drawn up.

As for IH Tax, i have assets that go above the threshold (mainly properties) what is the best way to negate the tax bill to my family? I think i remember a friend if mine taking out an insurance policy and upon his death, the payout equates near enough to the tax bill his wife and kids would be left with. Is this a sound idea? Or just throwing money away?

[astral]

I liquidated all my property last year and purchased an Executive Investment Bond with Royal Skandia Insurance.

Basically it is an insurance policy that will pay out, tax free, on my demise.

I have nominated how the funds are to be distributed.

The good part is that I still have control over how the funds are invested, I use a broker to help there,

and I can draw an income from the policy to keep me in my retirement.

All very cost effective.

[yorkman]

Thanks to the OP for starting a very useful and important thread off by the way.

I concur. And thanks to all of you other guys for sharing your experiences.

I think i have been in denial and believed i would live forever. Although i'm not really old, I really need to shift my butt on this and get a will drawn up.

As for IH Tax, i have assets that go above the threshold (mainly properties) what is the best way to negate the tax bill to my family? I think i remember a friend if mine taking out an insurance policy and upon his death, the payout equates near enough to the tax bill his wife and kids would be left with. Is this a sound idea? Or just throwing money away?

Ahhh you wont live forever, although I used to think that. You may go under a bus tomorrow (I hope not).

At present, as far as I can see there is no way to negate the IH bill if you want to keep your assets in the UK. UK property prices make this a joke even if you do not class yourself as rich.

[fletchsmile]

I'd tend more to the suggestions from Marshbags, to take advantage of various countries we live in. I'd have two wills.

As for Will writer, as someone else mentioned much of his info is incorrect. Also an accountant, lawyer or IFA makes more sense to seek advice from if you need to.

GuestHouse makes some good points generally on wills. However, these are rather narrow, and aimed more at UK residents and UK based people, with UK spouses. These also don't really take into account of opportunities available offshore and pitfalls on other UK taxes. On the whole they'd probably be OK for someone who is worth say less than GBP300k. Income tax, capital gains tax etc can all eat away at the expat's pot tho' if it's all UK based. The use of trusts can help, but discretionary trusts, accumulation trusts, income in property etc all bring different types of taxes with them.

For someone worth over say GBP 300k, the UK "safe haven" is likely to bring unneccesary taxes. Hence use of offshore products and even Thai investments in addition to UK would probably be a better move. i.e combine these UK ideas, with offshore ideas and Thai ideas for anyone with Thai connections.

Problems with too much of a UK only focus include:

- not being able to manage your THB currency risk effectively from UK

- small tax free threshold of GBP 300k on IHT. Average house prices + other assets takes a large number of people over this

- small tax free threshold of approx GBP 6k on income tax

- small tax free threshold of approx GBP 9k on capital gains tax

- while the UK has a good range of products, there are products on offer elsewhere that UK sometimes doesn't offer, or are better value

- need to look at the bigger picture

Then there is also the way the UK government tinkers with the tax system.

- eg changing pension dates

- eg Budget 2006 which set the cat among the pidgeons with IHT law changes and trust treatment changes. Whatever happens eventually they have shown how the UK government can move the goalposts with sometimes adverse consequences

I'd also be interested to know what people's "investment advisors" had to say about 2006 proposals, when they first came out, and how much they really advised told you...

Hence while putting some eggs in the UK basket is not a bad thing, and a lot of GH's points are valid, I would certainly advise anyone worth over GBP 300k to consider other baskets and assets outside UK jurisdictions. Also they need to look at the bigger, and not individual taxes, or even tax alone.

Offshore options and Thailand should definitely be considered.

eg some examples to consider in Thailand if you have a Thai spouse:

- joint name assets

- property,

- long term equity funds (were Thai govt actually gives you tax relief under much more favourable conditions than either UK pension or UK ISAs, albeit on smaller amounts)

- general mutual funds and securities which are exempt from capital gains tax, unlike the UK which gives a measely 9k a year.

- Use of joint bank accounts

- Savings plans for children that they can't access without an adult until 18

All can be done to mitigate THB currency risks, unlike the UK. They are often also more practical for someone living in Thailand. Offshore alternatives are even wider.

The key point is that the UK system is fine up to a point. After that intelligent use of alternatives can supplement the UK system, diversify and reduce your risks, as well as make life more practical. One of the benefits of living outside the UK, is picking and choosing who controls your financial future.

Edited February 5, 2008 by fletchsmile

[GuestHouse]

GuestHouse makes some good points generally on wills. However, these are rather narrow, and aimed more at UK residents and UK based people, with UK spouses.

For UK expatriates granted, but not so tightly defined as resident of having a UK wife.

A particualar problem with Thailand is the lax legal protections, and issues such as extended families. Having acted as the executor to the UK will of an English guy living in Thailand, married to a Thai and with a child (below the age of majority) from that marriage I can assure anyone here that protection and management of assets for the benefit of your dependents in Thailand is not simply a matter of handing over the cash.

I watched a Thai family strip this guy's widow and child of everthing that was moveable (and I mean everthything) and I had to personally deal with accusations that I had taken the money that was tied up in trust for his wife and his daughter.

UK wills and UK trust law are excellent vehicles for managing estates - Not just tax efficient but SAFE.

There are a number of options that are available, discretionary trusts are one, the registration of title being shared 50/50 and not 100/100 is another (that few people consider or know about).

These are issues that ought to be looked into and professional advice sought on before moving assets offshore, and certainly before moving assets to Thailand.

Its not just financial security that needs to be considered - Moving away from your home country, wherever that might be is fine provided you don't burn your bridges. My assessment of much of what is said about people moving assets off shore and in particular to Thailand is that they are perhaps breaking that bridge burning rule - unwittingly maybe.

Here on TV and elsewhere there are increasingly frequent reports from guys heading home, some because of financial pressures, some for all sorts of other reasons too.

I regard it as madness that while living in Thailand on discretionary visas and in the shaddow of undoubted changes that are ahead as the reins are passed over people are discarding their financial ability to return home.

Fluctuations in the value of the Bht are to my mind the least of anyone's worries. Unless of course your retirement is underfunded in the first place, in which case IHT is not likely a problem.

[fletchsmile]

Guest House

Again some good points, but still very UK focused. It's also important to highlight:

- orginial 2006 Budget Proposals and legislation will change some of your conclusions on trusts if they come about. I'm not sure what your advisors have told you on this. In some cases you could be worse off by setting up trusts. I'd be interested to hear your views on these changes and what they've told you.

- A non-UK spouse has very different tax implications than a UK domiciled spouse. Passing on to a non-UK domiciled spouse at death is not free of IHT, unike UK domiciled. You also effectively have only one 300k threshold. Someone with a UK domiciled spouse effectively has 2x300k.

My strategy involves making the most of 3 environments: 1) UK; 2) Thailand; 3) Offshore;

For me this means a UK will and a Thai will. For tax it means leaving amounts in UK up to the thresholds. Then I need to use offshore and Thailand. UK is inadequate to zero-ize all my taxes on retirment and death, and I'd be seriously disadvantaging myself and family by using only UK rules.

I would agree you don't necessarily want to burn all your bridges, but at the same time, you don't want to leave all your assets on one side of the bridge either. Particularly when the world lets you create other bridges.

While UK wills and trusts are good or perhaps evenn very good. Again I wouldn't describe them as excellent in terms of tax efficiency. Particularly when you look at income tax + capital gains tax + IHT as a whole.

Tax planning is also for the living.

eg you can make tax free capital gains in Thailand, in THB. UK is not tax free after a measely 9k, and brings currency risk. I can use the same global companies in both countries. Crazy to pay UK CGT. By all means use the measely exemptions but then spill over elsewhere.

I'd disagree with the comment on exchange rates. For many people living in Thailand, I would say fluctuations in THB are of more importance than IHT.

1) They affect you while you're living

2) IHT is currently capped at 40% on the excess over 300k. The THB has a vey good chance of fluctuating more than 40% in my lifetime, which could reduce assets left to a Thai wife and daughter, on death. We've already watched USD lose more than 25% in a couple of years. Could easily see that extend to 50%, and similar for GBP.

If someone gave me a choice between losing 40% over 300k after death, or 50% while living, that's a no brainer. But actually I will choose neither.

Key points is its not either or. You've got a reasonable solution in the UK. It's a good starting point, but it's far from optimal.

Edited February 5, 2008 by fletchsmile

[mrbojangles]

Jeezus, now i'm really confused. I think i'll go back into denial, that i'm going to live forever.

Seriously though, this is an extremely complex business. I suppose i have been so consumed in making my money and increasing the value of it, i've never really had the time (or inclination) to think about what i'm eventually going to do with it, when i pop my cloggs. All i was bothered about was that my ex-wife couldn't get her mitts on it. But now i've re-married, my goal posts have moved again.

Thanks guys, your views, advice and experiences, give much food for thought.

[GuestHouse]

- orginial 2006 Budget Proposals and legislation will change some of your conclusions on trusts if they come about. I'm not sure what your advisors have told you on this. In some cases you could be worse off by setting up trusts. I'd be interested to hear your views on these changes and what they've told you

Well I remember them writing to me to tell me the Government had done a U-turn in the face of widespread condemnation of the governments 'Original 2006 Budget law'.

[fletchsmile]

- orginial 2006 Budget Proposals and legislation will change some of your conclusions on trusts if they come about. I'm not sure what your advisors have told you on this. In some cases you could be worse off by setting up trusts. I'd be interested to hear your views on these changes and what they've told you

Well I remember them writing to me to tell me the Government had done a U-turn in the face of widespread condemnation of the governments 'Original 2006 Budget law'.

Just curious. What had they told you beforehand and when did they write?

BTW Some items went thru. Not a total U Turn

Lucky that the Conservatives took the high ground on this. I think U Turn changes were more politically motivated. They do highlight dangers and future intentions in the UK system. Complete shambles. Imagine the man on the street trying o work out what was going on.

[GuestHouse]

Well I do recall getting advice to adjust dates of when our children shall benefit from a trust we have set up, but nothing else and as you say, there was a U turn.

Anyway... how about the issues of protecting incomes and fund transfer in Thailand? - There is no trust law in Thailand, and lax laws protecting individuals against fraud.... and indeed Thai lawyers themselves are not know for their honesty.

Avoiding IHT only to pass your savings to some crook in Thailand or a rapacious extended family is not my idea of a saving. And as I say, I have had direct experience of dealing with a Thai family and their eagerness to plunder the estate of a dead farang - It was and remains one of the most truly nasty experiences of my life.

In fact it was that experience that started me looking into wills and is the motivation behind my frequent posts on this very critical subject.

[fletchsmile]

Well I do recall getting advice to adjust dates of when our children shall benefit from a trust we have set up, but nothing else and as you say, there was a U turn.

Anyway... how about the issues of protecting incomes and fund transfer in Thailand? - There is no trust law in Thailand, and lax laws protecting individuals against fraud.... and indeed Thai lawyers themselves are not know for their honesty.

Avoiding IHT only to pass your savings to some crook in Thailand or a rapacious extended family is not my idea of a saving. And as I say, I have had direct experience of dealing with a Thai family and their eagerness to plunder the estate of a dead farang - It was and remains one of the most truly nasty experiences of my life.

In fact it was that experience that started me looking into wills and is the motivation behind my frequent posts on this very critical subject.

Same points you make really. It's not either or. Very few people leave all their money in trusts. Makes sense for part of the money not in trust to be in Thailand.

As for family members there's plenty of examples of that in the UK too. Even trust law will only direct it to the party you want initially. You can't control it thereafter. If the Thai relatives got at the non-trust assets, which were not in their name, what makes you think they won't get at assets as soon as they come out of the trust, and are paid to the beneficiary, eg income taken out?. Shame your friend didn't have any trusted Thai friends to sort out for him.

There are plenty of fraud and incompetence examples in UK too: Northern Rock, Barings, Maxwell, endowment policies, Reliance Mutual, Equitable Life.

Sure, UK has some better protections than Thailand, but they also fail from time to time too. Then again other countries have better protection still. Might as well taken advantage of more than one. UK will not help you mitigate THB currency risk very well. Thailand is weak in other respects. Offshore can provide the best of both worlds, particularly on taxes for the living, tho' it can sometimes incur higher admin costs etc. Horses for courses.

Edited February 5, 2008 by fletchsmile

[chiang mai]

Apologies for missing out on the debate for the past week but I've been away. During my travels I had a chat with a UK based Solicitor and he decided that all of this discussion is a non-issue! The point he made was, if you are non-domiciled and non-resident in the UK AND you are deemed to be domiciled in another country but not resident in that country, the benefits of a UK will are non existent - this predisposes that the associated assets are off shore UK also, the UK has no interest or claim whatsoever. Given that scenario, write a will under say Hong Kong law where IHT does not apply. It all seems too easy.