A Question re Thai Wills

[Guest fountainhall]

There was a thread more than a year ago - "How much money can I carry when exiting Thailand?" This eventually touched on the subject of the importance of anyone with assets in Thailand having a Thai will. I had one drawn up several years ago, with two members of my family nominated as the beneficiaries. They are aware and have signed affidavits that any funds out of Thailand go into the pot with any other income I have to be disposed of in accordance with a master will in the UK. I did it this way because I was informed that Thai wills must be made out to individual/s and can not be made out to the estates of deceased persons in other countries.

 

An issue recently came up to which I can obtain no answer. All being well, the two family members will, technically, receive funds from the sale of a small condo unit and perhaps a little from a bank account. I obviously want to ensure that this income is not taxed as gifts to individuals before being put in the pot. The solicitor who drew up the UK will was not sure of the legal position! The Thai lawyer has no knowledge of the detail of UK law.

 

So I wrote directly to the UK Revenue and Customs Department for a ruling. Late, as usual, the reply came in this week - "Unfortunately we can not offer any advice in relation to the query raised in your letter . . . You may need to seek specialist advice from both UK and Thai solicitors."

 

The amount of money coming out of Thailand will be relatively small and clearly I do not wish to spend a small fortune in having a specialist legal firm negotiate with the UK government for a definitive ruling. I wonder if anyone here has any thoughts.

[mahjongguy]

"...want to ensure that this income is not taxed as gifts to individuals before being put in the pot."

 

Taxed by Thailand or by the UK?

 

Random thoughts:

- Would it suit your purposes to add those family members to the chanote as joint owners?

- You can designate family members as beneficiaries to your bank accounts if you want.

- You could mention in your GayRomeo profile that you are seeking an heir.

[Bob]

What you're asking, I believe, is strictly a question of English law so it's an English lawyer/solicitor that you need to question about that.

 

But (using US law logic and not knowing a whit about English law.....however, we get a lot of our notions from our old colonial masters), the Thai assets will be have to be probated here in Thailand. While that'll cost some money (my Thai lawyer said about 50,000 baht), then it's difficult for me to believe that the distributions from the Thai assets will be taxed as a gift in your home country (a gift being what you give while you're alive, a bequest being a distribution (or, sorta, gift) from somebody taking a dirt nap (a legal phrase...).

 

So the only question I'd be asking is whether assets probated from a country other than England are subject to whatever estate/inheritance tax that England applies to it's dead citizens. My guess is, yes, the Thai bequests will be part of your English estate for estate/inheritance tax purposes. I also would guess there would be no "gift" tax at all.

 

Anyway, that's my 2 baht (and it might be worth what you paid for it!).

[Bob]

- Would it suit your purposes to add those family members to the chanote as joint owners?

- You can designate family members as beneficiaries to your bank accounts if you want.

 

 

Under US estate law, assets in a mutual fund, IRA, or the like that carry a direct beneficiary are still included within your federal estate for estate tax purposes. Same with the joint accounts (excepting for that portion of the joint accounts that the beneficiaries can demonstrate were their assets in the first place).

 

Here in the US, 95%+ of estates now are not taxed under the federal estate tax....the first 5 million (US dollar value) is excluded or exempt (which, of course, means my heirs have no friggin' worries). Out of curiosity, is any portion of an English estate excluded/exempt and what's the tax rate after that?

[Guest fountainhall]

Taxed by Thailand or by the UK?

UK

 

(1) . . . it's difficult for me to believe that the distributions from the Thai assets will be taxed as a gift in your home country (a gift being what you give while you're alive) . . .

 

(2) Out of curiosity, is any portion of an English estate excluded/exempt and what's the tax rate after that?

(1) Basically, you are correct. But inevitably it's complicated. Under English law, gifts to individuals in excess of £3,000 each year are taxed. And gifts made in the seven years prior to death are clawed back (if tax has not been paid) and included in the estate for Inheritance Tax purposes!

 

(2) After death, bequests made up to £325,000 are not taxable. Bequests above that amount are taxed at 40% with each beneficiary paying pro rata. So it's not a high threshold.

 

Re an apartment/house, I could basically sign my condo over to the family members today and hope I live for seven more years. Thereafter, under English law, no duty would be payable on its value. In the interim, though, there are two problems. One is I would have to pay rent as it would effectively not be mine (although I am sure there are ways around that). The other is: what happens if my personal circumstances change and I want to leave it to an individual rather than to the estate?

 

The more I think about it, the more confused I get! I had thought about the possibility of having my domicile registered as Kong Kong where I am told everything is much easier, and where I remain a permanent resident. But that does not help my beneficiaries, most of whom are in the UK and could end up being subject to the more stringent Gift Tax rather than Inheritance Tax, as I have absolutely no idea how English law treats bequests originating from overseas.

 

So I guess I do need to take more legal advice - or go mahjongguy's route and spend the next few years auditioning promising candidates for the role

 

- You could mention in your GayRomeo profile that you are seeking an heir.

[pong]

seems to me-and again I am no expert at all in these matters, that it is basically the same as if you had a 2nd home in whatever country and died without any direct relatives (children etc.). Here in this EU-country the threshold for heritage is very, very high for direct children (and be honest: is what you describe as your small little condo worth over 325k in GBP=nearly 15 million THB?) and gets lower when the lineage to those who gain is further away. Best way to get some general advice would seem to be in the multitude of ''home abroad'' UK organisations, much less costly as a solicitor on an individual project.

If you choose to ''give'' your condo now to the relatives, it would turn the situation around; then they give to you (the rent-value), no idea if that would also hit you with UK-taxes.

Most urgent to me would seem to have someone trusted in Thailand to take care of your possessions after death- and handle them in the way you requested.

[mahjongguy]

"...I could basically sign my condo over to the family members..."

 

That's different from my suggestion of making them joint owners with you. If you are all on the chanote then you retain sufficient control and I think the 7 year wait should be eliminated, but those are issues for a UK attorney.

 

As a Yank I would look into some sort of trust to handle the situation. If the UK has similar structures, you might benefit from the way that they can help minimize estate taxes.

[Guest fountainhall]

That's different from my suggestion of making them joint owners with you. If you are all on the chanote then you retain sufficient control and I think the 7 year wait should be eliminated, but those are issues for a UK attorney.

Unfortunately, the UK Tax authorities would not look on this as a gift as I would still legally retain part control. In the eyes of the assessors, gifts have to be outright with no strings attached.

 

Thanks for all the suggestions. I'm now pretty clear that I do need further legal advice, if only to make sure I don't get any of my family into awkward situations further down the line.

[Bob]

(1) Basically, you are correct. But inevitably it's complicated. Under English law, gifts to individuals in excess of