Income In Retirement

[wamberal]

My Thai wife and I are planning to retire permanently to live in Phuket.

We currently own between us financial assets of the equivalent of about THB 50 million, in Australian shares and managed funds, in addition to sufficient money to buy a house, car, etc and for emergencies.

My wife is well-educated and bright, however I want to simplify everything for her so that when I fall off the twig she will have no difficulties managing our investments. She is 15 years younger than me.

I therefore plan to move all our assets to Thailand, and put them into a fairly conservative but simple form.

Any suggestions? Government bonds? Bank term deposits? I would like to have a bit of growth as well, so maybe some off-shore managed funds as well?

A net income of about 6% per annum would do us, although a little bit more would not go astray.

[Chang_paarp]

Wamberal

Given the dynamics of the Thai marketplace, conventional wisdom is to leave your investments in other countries and import living expences, partly due to the limited fiduciary (sp?) standards for investments.

A relatively conservative managed fund in Oz will give you a better and safer return than most investments in Thailand. It will make your retirement visa easier, and give you and your wife a safe haven if the Thai economy or politics go pear shaped.

If you are wanting to avoid our friends in the ATO, look at investments based in Singapore or maybe Malaysia. They have relatively friendly tax regiemes for investors.

[Firefan]

Congrats on being well prepared financially for retirement! There are quite a few hopefulls asking questions here that have very little (or nothing!) hoping to retire in Thailand.

Changs comments makes good sense I think. Problem in Thailand is that the products/funds available are mainly focused on Thai stock market which would lead to limited diversification. The Thai based funds that ARE focused on international exposure are expensive, have loads and are badly managed mostly. Offshore funds (or your home country) makes much more sense to me.

Maybe taking a chunk of the nest egg and putting it into time deposits of different lengths (paying around 5%/year) in Thailand can help you build an income ladder - and get some of the money into Thailand/THB.

Cheers!

[wamberal]

Wamberal

Given the dynamics of the Thai marketplace, conventional wisdom is to leave your investments in other countries and import living expences, partly due to the limited fiduciary (sp?) standards for investments.

A relatively conservative managed fund in Oz will give you a better and safer return than most investments in Thailand. It will make your retirement visa easier, and give you and your wife a safe haven if the Thai economy or politics go pear shaped.

If you are wanting to avoid our friends in the ATO, look at investments based in Singapore or maybe Malaysia. They have relatively friendly tax regiemes for investors.

Many thanks for your reply. I have considered moving some of our Australian assets to Singapore, maybe with HSBC Private Banking (if we qualify).

I am not trying to avoid Australian tax, I will pay CGT before we leave, plus all income tax etc. I have been around long enough to know that it is better to sleep well at night than to have a bit of extra money.

[Chang_paarp]

If you are moving to Pukett full time, it may be worth checking with your accountant to see if there is a different tax rate for non residents. Apart from not paying the Medicare levy. Can't remember if is Oz or the poms.

Remember the imortal words of Kerry Packer who granting an audience to the senate estimates committee on Taxation;

"Anyone who does not take advantage of all the legal avenues to reduce their tax is a fukcing idiot."

[pnustedt]

Many thanks for your reply. I have considered moving some of our Australian assets to Singapore, maybe with HSBC Private Banking (if we qualify).

I recently moved to Thailand, most of my portfolio is invested through HK where the tax rate on investments is zero. I have an a/c with HSBC there which enables me to hold various currencies (inccl. Aus $ but not Thai Baht) in the same a/c and enables quick switching between currencies. In Thailand I have a float (a few mill Baht) in a savings a/c and would top up as required. Thai Banks' service is abysmal and I would not keep large investments here.

HSBC also have a number of investment products which may suit you.

My banking is done on line from Thailand and, so far, has been painless and I have avoided sleepless nights.

[GuestHouse]

I therefore plan to move all our assets to Thailand, and put them into a fairly conservative but simple form.

The rule always applies, do not take money to Thailand that you cannot afford to loose.

My advice would be place your money in solid investments back in Australia that provide a secure income. Then write your Will to cover your wealth after you retire and include an attachment to your will outlining your concerns and considerations you would like to be taken into account by the executor of your will– Appoint an executor who understands your personal circumstances and the circumstances your wife will be in after your death.

See other threads on Wills.

The balance to be struck is, providing your dependents with an income, and securing that income so that it remains with your dependents and does not get ‘sequestrated’, by family, friends, officials etc. This is especially important if you have children, now or in the future.

Leaving a large wad of money in Thailand under the control of Thai law is not my idea of a good idea – Leave it in Australia.

Secondly, consider your own security. While your wife is 15 years your younger, that is not guarantee that she will out live you – What if she dies first.

My answer to this is:

• Keep all savings off shore in your name controlled by a Will

• Buy your house in your wife’s name but ABSOLUTELY lease the house back from your wife – If she dies you still have solid tenure. You die the lease is cancelled and she gets the house

• Buy your car in your name. You die she can easily transfer it to her name. The reverse would not be as easy.

Note here that that the income from selling your house is in itself a very good buffer for your wife.

[malcolminthemiddle]

• Keep all savings off shore in your name controlled by a Will

If you are concerned about the proper execution of your Will, you could place these assets in joint names.

[GuestHouse]

If you are concerned about the proper execution of your Will, you could place these assets in joint names.

I take the view that this thread will be read by others in similar, but not identical circumstances.

As I state in my response the protection of assets and income becomes especially important if there are children to be catered for.

Controlling your wife's access to your money after your death in a way that prevents it all being taken in one go might not be the most 'liberal' way of helping your wife after your death, but it will ensure that she is not left destitute by any number of people who might take it upon themselves to help her spend the security you have provided her with.

I've acted as executor for an Englishman who died leaving a Thai wife and child - Believe me, had there been no protection under a will, and if his wife had had direct access to all their savings after his death she would have been bled dry by the relatives.

As it was they only stripped the house bare.

But I had some very heated discussion with brothers and sisters of the Widow who were convinced that I personally was holding on to the money, it took a Thai lawyer to convince them that they had no access to the money and that I did not have it in my bank account - Up until that point I was fully convinced that they were on the verge of filing a police complaint.

The widow now lives a very comfortable life with a secure monthly income and the daughter has completed university in the UK where she now lives.

The power a Will and necessity of a Will in Thailand cannot be overestimated.

[malcolminthemiddle]

[

The power a Will and necessity of a Will in Thailand cannot be overestimated.

For offshore funds?

In any case the commercial acumen of the inheritor and parasitic tendacies of relatives are personel issues.

[GuestHouse]

In any case the commercial acumen of the inheritor and parasitic tendacies of relatives are personel issues.

I would argue they are realities that need to be addressed, especially if there are children to be considered.

And we need not regard this as a negative view of the inheritor - Well written wills are a great way of removing the inevitable uncertainty and stress that comes with berievement.

[Harry2]

I am a couple of years off sorting out a permanent arrangement to take care of both investment growth/income & legal security into the future. The answer to the latter is to establish a trust as a means of ensuring your wishes are carried out after death & protecting your family - more often than not from the rest of the family. There is absolutely no reason for a Thailand based retiree to have their capital located in Thailand & many many reasons not to as listed previously - crummy investment opportunities, hopeless regulation, corrupt legal system, etc.

The solution that I will be examining will be via Singapore where the Government is encouraging the establishment of foreign owned trusts, where you have a low level of corruption, a decent legal system & a wide range of properly regulated, international investment companies. Easy to visit from Thailand to stay in personal control.

[GuestHouse]

I think it's worth pointing out, there is no Trust Law in Thailand, so controlling wealth via a trust needs to be done offshore from Thailand.

Also, a Trust may be formed as part of a Will, but a Will cannot allocate funds within an existing Trust.

This because by definition a Trust is not owned by the benficiary of the Trust.

I'd be inclined to only use a Trust for my pensions (which in the UK are heald in Trust) and for funds I have set up for my children.

[Charma]

Many thanks for your reply. I have considered moving some of our Australian assets to Singapore, maybe with HSBC Private Banking (if we qualify).

I recently moved to Thailand, most of my portfolio is invested through HK where the tax rate on investments is zero. I have an a/c with HSBC there which enables me to hold various currencies (inccl. Aus $ but not Thai Baht) in the same a/c and enables quick switching between currencies. In Thailand I have a float (a few mill Baht) in a savings a/c and would top up as required. Thai Banks' service is abysmal and I would not keep large investments here.

HSBC also have a number of investment products which may suit you.

My banking is done on line from Thailand and, so far, has been painless and I have avoided sleepless nights.

What kind of return are you getting from HSBC in HK. Also, what degree of risk is there?

[Mr_Dave]

.

Nobody has yet mentioned a Swiss annuity, with the wife as a named beneficiary.

Excellent security and management under Swiss legal jurisdiction.

Avoids the uncertainties of Thailand's economy and legal process.

Can be structured to hedge against inflation with investments in gold.

At-will redemptions for emergency need of extra funds.

Worth considering for a conservative approach to protection of wealth.

.

[Harry2]

When you set up a trust in a proper jurisdiction & with a suitable lawyer or investment company arranging it, the beneficiaries are determined entirely by you & according to your instructions can be altered. It is a very clear cut & effective mechanism, provided it is set up properly in the first place. It has been doing the job intended for centuries.

[pnustedt]

What kind of return are you getting from HSBC in HK. Also, what degree of risk is there?

You can select the funds you wish to invest with through HSBC - they use a number of mutual fund providers - the risk levels are quite clear and the returns will, of course, depend upon the performance of the funds.

Personally, I use HSBC in HK for banking, with time deposits and various currencies in my account. My investments are with other companies and the returns are paid into my HSBC a/c. I then transfer cash to Thailand as I need it.

[wamberal]

Thanks, everybody, for your great input.

Off-shore in either Singapore or Hong Kong looks like the go, with regular remittances to a Thai bank account.

The idea of setting up an off-shore trust is interesting, especially if I can simply transfer our current shares and managed funds into the trust (after paying CGT here etc and getting a tax clearance).

In some ways Singapore has the edge, being a bit closer, although I worked in HKG for many years, so still have some contacts there.

Thanks again.

Edited July 18, 2006 by wamberal