A Cookoo In The Nest?

[GuestHouse]

This post is inspired by the post 'Marrying a Thai who has children'.

A foreigner who is married to a Thai who has children by a previous partner may be at risk of loosing the communial property of their marriage if their partner dies before they do.

For example.

A foreigner marries a Thai woman with a child from a previous marriage to a Thai man. The foreigner and his wife buy land and buid a house, perhaps run a business together where the Thai wife is the major shareholder (perhaps the only share holder).

Under Thai law the foreigner cannot own land and there are restrictions of him owning the business - it is a Thai business, his wife's not his. The land is his wife's he cannot inherrit.

But his wife's child can inherit.

Now if the wife dies, the child inherrits and the husband is now at the mercy of the child and importantly the child's other parent, who might now move into the scene to enjoy his child's new found wealth.

If the Child has not reached the age of majority, the child's biological father might seek to act for the child and in doing so gain direct control over the wife's estate, thereby placing the foreigner at risk of loosing everything.

It seems then that without some form of legal planning the child is a regular cookoo in the nest.

Anyone here thought that one out?!

[chonabot]

My stepson wouldn't dare....would he ?

[Dickie]

Lots of worried farangs anxiously phoning their lawyers on monday, m'thinks.

Mustard mitt it's not something to which I'd have given much thought.

[Spee]

It seems then that without some form of legal planning the child is a regular cookoo in the nest.

Anyone here thought that one out?!

<{POST_SNAPBACK}>

While I know "jack-squat" about Thai law, I gotta believe their is some way to set up a trust so that the child is protected. Am I right? Not sure ...

[sonthaya]

It seems then that without some form of legal planning the child is a regular cookoo in the nest.

Anyone here thought that one out?!

<{POST_SNAPBACK}>

While I know "jack-squat" about Thai law, I gotta believe their is some way to set up a trust so that the child is protected. Am I right? Not sure ...

<{POST_SNAPBACK}>

I was made to understand that you could a 30 year lease signed by the wife, that should protect you for 30 years.

[GuestHouse]

My understanding is that the thirty year lease has never been tested in a Thai court.

[SK1972]

I think the WISEST thing is NOT to purchase a property in Thailand, especially in someone elses name............that would be your safest bet!

[astral]

This is exactly why foreigners should buy the land through a company.

Then they retain control, whatever happens, as the farang will be the Director of the companywith a 49% share holding.

On death the shares can be left to the wife or child.

It not only applies to wives with children from previous marriages.

If you have a "brand new" wife and you have children, the same problems can arise if you wife predeceases you.

If the house is her name, and your children are still minors, you will be at the mercy of whoever inherits the house. You cannot inherit it!!

[tutsiwarrior]

if 30 year leases have never been court tested why are they a popular means for foreigners to have control over property purchased by the Thai spouse with the falang husband's money? Is this a mistaken perception (30 year lease as an effective means of control)?

[Doctor John]

Not so sure about having a house in a company name, what happens if your company is asked to show what that company does, who you employ, what Tax you pay?

What if companies that are set up purely for property ownership suddenly come under scrutiny from The Thai Government ?

As far as I am concerned that is too much to worry about. All the ' What If's ' = too many sleepless nights.

Put it in the wifes name, if we split up, she gets the house, I would never contest that anyway.

I can always work for 2 months and buy another one.

I would never spend more than I can afford, I would never be a guy that spends 3 - 4 Million Baht on a house then has sleepless nights worrying what will happen if it all go's wrong.

[think_too_mut]

Not so sure about having a house in a company name, what happens if your company is asked to show what that company does, who you employ, what Tax you pay?

What if companies that are set up purely for property ownership suddenly come under scrutiny from The Thai Government ?

As far as I am concerned that is too much to worry about. All the ' What If's ' =  too many sleepless nights.

Put it in the wifes name, if we split up, she gets the house, I would never contest that anyway.

I can always work for 2 months and buy another one.

I would never spend more than I can afford, I would never be a guy that spends 3 - 4 Million Baht on a house then has sleepless nights worrying what will happen if it all go's wrong.

<{POST_SNAPBACK}>

In the West, take a 200K mortgage, you will pay back 700K over 25 years. Is anyone crying after half a million given to the bank? And the house may still be worth only half of that.

To lose a house worth 5K US$? or 10K US$ in Thailand? Not nice but it's peanuts comparing to what happens at home.

[Simbo]

The reason the 30 year lease system has not been challenged in the court is obviously because any good lawyer would advise them that they are in a no win situation and to spend maybe 50k trying would be money in the bin.

That was the advise given to my ex.

[Sumitr Man]

In all my time of viewing/reading TV, I've yet to come across a thread with so much misinformation - it's difficult to know where to start???

First, the reason a 30 year lease has never been challenged - because it is so legally sound you would need to insane to bother:

Section 540 of the Civil and Commercial Code

The duration of immovable property [land] cannot exceed 30 years. If it is made for a longer period, such period is to be reduced to 30 years.

The aforesaid period may be renewed, but it must not exceed 30 years from the time of renewal

Thus -

30 years = good

60 years = doable, but questions may be raised,

90 years = doable, but likely to lose if challenged.

Second:

Section 93 of the Land Code

The Minster shall permit the inheritance of land by an alien who is the lawful heir, but such acquisition, when added to that which is already held, may not exceed the amount which may be held under Section 87*

*for the purposes of residential landholding, the limitation on a foreigner under Section 87 is 1 Rai - hence the 1 Rai rule under Ministerial Regulation: Prescribing principle, procedure and condition for land acquisition to be used as alien living quarter B.E. 2545 issued January 18, 2002.

NOTE, HOWEVER, if the Minister does not give his consent under Section 93 of the Land Code, Section 94 of the Land Code comes into play.

Section 94

All the land which an alien has acquired unlawfully or without permission shall be disposed of by such alien within the time limit prescribed by the Director-General, which shall not be less than 180 days, nor more than 1 year

QED:

Your wife can leave you the land in her will, making you the lawful heir. You apply to the Minsiter for permission to own the land. The Minister says yes - fine. The Minister says no - you have 180 days to find a "friendly" buyer.

Of couse, this is not to suggest that you don't consult a good lawyer - but I sometimes wonder how people who consider spending upwards of $100k do so without doing any, or minimal, research and then wonder why they are getting ripped off

[Sumitr Man]

Furthermore, if anyone tells you that the hire of immovable property [land] is extinguished by the death of your wife, ask them to read:

Section 569 of the Civil and Commerical Code

A contract of hire of immovable property [land] is not extingusihed by the transfer of ownership of the property hired.

The transferee is entitled to the rights and is subject to the duties of the transferor towards the hirer.

QED - Even if your wife loses the land in a game of cards , if you have a 30 year lease, the winner of the card game cannot kick you off the land

[GuestHouse]

Has this ever been tested in a court of law?

[astral]

Not so sure about having a house in a company name, what happens if your company is asked to show what that company does, who you employ, what Tax you pay?

<{POST_SNAPBACK}>

You sign a lease with your company to occupy the house at a low rent.

Then the company pays tax on the rental.

Mine cost 14,000 baht in auditors and filing fees, and 6000 baht tax for the last year.

[Sumitr Man]

You sign a lease with your company to occupy the house at a low rent.

..emmm, without wishing to rain on your parade, possibly not the best idea:

TaxCORNER

Fee waivers subject to tax scrutiny

LAWALLIANCE LIMITED

You may recall that we have mentioned on a number of occasions the difficulty of being a good taxpayer in this country, and the fact that doing so is sometimes very costly. Lessons from the tax authorities have been taught to all of us and we have had to listen and learn from each other's experiences.

Under the Revenue Code, a company is generally prohibited from disposing of goods or providing services without consideration, or for consideration considered to be below "market value". This measure exists to safeguard against transfer pricing transactions. However, an exception does exist _ where such transaction is made on "justifiable grounds".

In a recent case, a Thai company undertook to let space and provide services to a government-owned university at the rate of 200 baht per square metre per month and 100 baht for common utilities services. Later, the board of the company agreed to waive the rent and the service fee and the university only paid for the actual costs of the utilities, without any mark-up. Being a good taxpayer, the company sought an opinion from the regional tax officer to confirm that such an agreement could be regarded as having been made on "justifiable grounds", and that the value of the rent and the common facilities services waived could be treated as a donation to a government body; thus, it was entitled to a deduction for corporate income tax and value-added tax purposes.

Much to the company's surprise, the regional tax office did not agree with the company's assessment of the situation, so it turned to the legal office of the Revenue Department for help. Here, the outcome was even worse _ the legal office considered that the waiver of the fees was made without "justifiable grounds" and the company was subject to a tax assessment on the value of the forgone rent and service fees _ equal to their market value on the date that the services were provided. Moreover, the company was not allowed to treat the forgone rent and service fees as a donation made to a government body for tax deduction purposes.

The taxpayer in this case learned an expensive lesson. It had submitted a letter seeking the opinion of the tax authorities without first having determined the likelihood of a successful outcome. Consequently, not only had the company donated the cost of the rent and service fee, but it was also forced to pay for this: in terms of paying taxes on such money to the tax authorities, plus surcharges and a penalty.

Regrettably, the company's good intentions and gesture were not taken into account by the tax authorities at all. Also regrettable is the fact that this decision could well have an impact on whether or not donors decide to make donations to government entities in the future.

In fact, the tax auditor should never have considered penalising a taxpayer that donates property or services to government entities in good faith, even if the value of the goods or services is not entitled to a tax deduction. It simply reflects good tax administration policy.

As a matter of fact, the term "justifiable grounds" under the law is intended to provide the authorities with flexibility in managing its authority. Sadly, as this case has shown, the term also provides the authority with broad room to exercise its discretion (likely too much).

The caveat outlined in the ruling is that the tax authorities imputed a fair market rate of income against the taxpayer because the above agreement took the nature of a "reciprocal contract", rather than a gift (to the university) from the beginning. Therefore, the waiver of the rent and service fees was never justifiable.

This raises an issue that should be of real concern to taxpayers, as entering into a reciprocal contract does not, in itself, mean that a subsequent waiver has, or has not, justification.

Prepared by Piphob Veraphong, Thanasak Chanyapoon and Prangtip Anantavipat. They can be reached at [email protected] or 02-651-5490.

http://www.bangkokpost.com/Business/23Nov2004_biz08.php

[stevejones123]

Has this ever been tested in a court of law?

What exactly do you want tested? That the lease is invalid because the neighbour disapproves of your brand of toothpaste?

This is not sarcasm. In order to reverse a lease the complainant must allege due grounds, and transfer of the freehold is not one of them. Even if the complainant is the judge's brother-in-law the judge will still have to find another legal pretext for declaring in his favour, and thus you don't have precedence.

[bkkmadness]

Not so sure about having a house in a company name, what happens if your company is asked to show what that company does, who you employ, what Tax you pay?

<{POST_SNAPBACK}>

You sign a lease with your company to occupy the house at a low rent.

Then the company pays tax on the rental.

Mine cost 14,000 baht in auditors and filing fees, and 6000 baht tax for the last year.

This is for sure an old thread, advice like this would be blasted out of the water now.

[Aujuba]

It's like the stock market, don't invest more than you can afford to lose.

Thais happy to see you come and happy to see you go!

Just like my grandmother always said to me when I visited her house.

[a2396]

I don't know why anyone in their right mind would even consider such a situation, ie buying property to which they have no rights of ownership. In a country where they are guests on a yearly renewable basis and often have a poor knowledge of the local language, if any and where ethical standards are pretty thin. It seems to me that these guys have left their brains back in their home country, if they had any. And, lets not forget all those generous gentleman bragging about the capital goods (houses, cars) they bought for other related family members - brothers, sisters, parents, etc, etc.

[beammeup]

Why cant the wife just leave a will, and leave the land to the kids (leaving out the kids from the first marrieage) with the falang father being their guardian untill they reach a legal age??

[Naam]

Not so sure about having a house in a company name,

I can always work for 2 months and buy another one.

hmmm... quite interesting... the thought of living in a dog house

[keenok]

.leave your wealth offshore,rent a place to live .whats so bad about that ?? if you are talked into buying land /property for your wife/gf or her long suffering family,you only have your self to blame if you get ripped off. many farang are ripped off here and many do not and have a happy life ,but remember THIS IS THAILAND ,THINGS CAN CHANGE QUICKLY,(including the attitude of your wife) IT IS THAT SIMPLE.