Family Money: Leaving it all behind you - Part 1
By Leslie
Wright,
Managing director of Westminster Portfolio Services (Thailand) Ltd.
Whenever the thorny subjects of estate planning and
inheritance tax are raised, many clients respond with a shrug and the
blithe comment that they don’t give a fig what happens to their money
after they’re dead. If only it were as simple as that.
With property prices in Britain at record levels, and
Chancellor Gordon Brown in his Budget 2003 speech in April having raised
the inheritance tax threshold by just 2% to ฃ255,000, an increasing
number of people are falling into the UK inheritance tax net.
Your family home in UK - as a ‘principal private
residence’ - may be exempt from Capital Gains Tax (‘CGT’), but it
could easily push the value of your estate into the Inheritance Tax (‘IHT’)
bracket.
IHT is charged when assets are transferred from one
person to another or into trust. Usually, the charge is levied on the
estate when someone dies, but it also applies when assets are gifted
during one’s lifetime.
It all depends on domicile
Whether someone falls into the UK IHT net - be they a
British resident, a UK expatriate living abroad, or a foreign national
resident in the UK - all depends on their domicile.
As I have written before, many British expatriates
think that by virtue of their non-residence in UK they have protection
against UK IHT, but this is not the case.
If they are UK domiciled and live overseas, when they
die they will be subject to IHT on their worldwide estate unless they have
gone to great lengths to change their domicile.
Anyone not UK domiciled but with property or assets in
the UK will be taxed only on their UK-based assets.
Many people confuse domicile with residence, but
domicile is not just about where you have your home, it’s much more
tenuous than that: it goes to state of mind. Domicile is difficult to
change unless you settle in a country with the intention of remaining
there permanently and even then, there are no hard and fast rules. The
matter is finally decided by the courts only after you’ve died - and of
course it’s too late then for you to do anything about it.
Changing the rules?
For many years the UK government has talked about
reforming domicile laws, mainly in an attempt to end the favourable basis
of taxation for foreign nationals resident but not domiciled in the UK. In
this year’s Budget, there were no concrete changes announced, although a
background paper was issued inviting responses.
A change in domicile rules is likely at some point.
Such a reform would be designed to catch wealthy foreigners in the UK,
whereby after a few years in the UK - perhaps five or ten - foreign
nationals will be deemed UK domiciled. This might similarly benefit UK
domiciled people living abroad. At present, however, it is not easy to
shed one’s domicile - hence IHT liability. What is easier is to reduce
that liability.
Fortunately, IHT is not taxable on an entire estate.
The first ฃ255,000 of assets is exempt: called the ‘nil rate
band’. After ฃ255,000, IHT of 40% is chargeable on the balance,
which could trigger a large tax bill. For instance, if someone has assets
worth ฃ500,000, the first ฃ255,000 is tax free but they would
have to pay ฃ98,000 IHT on the balance.
Inheritance tax now affects more people than ever
before - partly due to the dramatic rise in house prices in recent years.
The smaller the better
How can you reduce your IHT liability? Fortunately, if
you do your planning early enough, there are a number of ways in which you
can manage your liability. These include making gifts, making transfers
using a will, and making transfers into trusts. It’s essential that you
take advice, though, as setting up wills and trusts requires financial
expertise.
Most IHT planners agree that the first thing a client
should do is to ensure their estate is as small as possible by giving away
their assets.
Making gifts
All sorts of bequests carry tax exemptions. When gifts
or transfers are made by individuals - whether directly or into certain
types of trusts - they are treated as Potentially Exempt Transfers (‘PET’s),
which are a useful way of gifting assets during a lifetime without
incurring IHT provided you live for seven years after making them. If
death occurs before then, IHT is charged subject to taper relief and the
nil rate band.
There is a way to use this exemption, though, and
retain flexibility over when the gift is made: setting up a gift trust and
transferring the gift into it. You can then choose to vary the
beneficiaries, the amounts given and when they benefit. It’s a simple
plan for people who aren’t yet ready to give, but want to make the most
of exemptions during their lifetime.
Smaller gifts that you are ready to make can be kept
tax-free using the annual gifts exemption: this allows individuals to give
away up to ฃ3,000 a year and married couples up to ฃ6,000 a
year, as well as any number of individual gifts of no more than ฃ250.
No IHT is charged either on marriage gifts up to ฃ5,000, gifts to
charity or to recognised political parties.
(To be concluded next week…)
Personal Directions: Challenges and obstacles fuel our existence
By Christina Dodd,
founder and managing director of Asia Training Associates
This week I would like to share an article with you that
came to me through a reader in the States. The article is by John & Melody
Anderson and I think you may find it an interesting read. It deals with the
subject of challenges and obstacles in life and brings to light the reality of
their place in our existence.
Rocks (March 1996)
We employ the use of an analogy here to demonstrate the
requirement for challenge in life and to show that without obstacles in life,
much of the enjoyment we get from overcoming these obstacles, and thus our
purpose, would be lost.
The world is filled with rocks of all shapes and sizes.
Some are large, some are very small, some are immovable and some are not. Yet
the rocks that prove to be the most significant obstacles are those that do
not exist. Invisible non-existent rocks can be hazardous. They can cause mild
abrasions when walked into by an unsuspecting pilgrim. They can inflict rather
more serious injuries if the pilgrim is running or moving at considerable
speed. And if a pilgrim is endeavoring to clear an area for planting,
invisible rocks continue to surface, usually it seems, when the pilgrim is
making the most progress. Just as an area seems to become clear, more rocks
appear, apparently from nowhere and the pilgrim must begin all over again.
This would seem to frustrate the pilgrim who is eager to expose a clear space
so that they can build, but until such time must continue to struggle with
multiplying rocks.
Little does the pilgrim know that the multiplication of
those rocks is crucial to the fulfillment of their initial vision for the
piece of land. Commonly, pilgrims misperceive this vision and incorrectly
assume that the vision is a piece of land devoid of rocks and stones upon
which something may be built. Just what this is, however, remains somewhat of
a mystery.
The part of the assumption that is incorrect is that the
vision is a piece of land devoid of rocks and stones. In fact, it is more
correct to hypothesize that the vision is the rocks and stones and indeed the
moving of them. It is the interrelationship of these elements that defines
such a vision. Move and dispense with the very last rock and stone and the
body stagnates, the mind remains unchallenged and what the pilgrim is left
with is very little reason to exist at all.
Imagine a world without rocks and stones. Bliss the
pilgrims cry. But no, far from it. Imagine again, what then is the substance
of the vision? What gives the vision its special appeal?
For the pilgrim who seeks greatness the secret is finding
peace amongst the rocks, moving what he can, developing strengths and skills
to move what he cannot and greeting the emergence of other rocks and stones
with equal relish.
Many of the pilgrims who seek greatness play a waiting
game, ever hopeful of one day arriving at that glorious moment when the final
rock will be gone from the land and life can be easy at last. Rather misguided
is the pilgrim who plays this game, for their joy can only come from an end
result and an impossible one at that. The pilgrim who prospers is the
individual who is prepared not only to move rocks and stones consistently, but
whose love of life does not depend on the absence of the rocks.
In fact, the pilgrim relies on these rocks to satisfy the
achievement of their vision. For the vision is not a thing, or even a series
of things, nor is it a particular combination of circumstances in an
individual’s life. Achievement of the vision relies on the interrelationship
between individual and rock. In exercising this interrelationship, a way of
being is expressed and this way of being either aligns with the vision or
directly opposes it.
The vision then, crucial to fulfillment in life, is a way
and the expression of that way in action. This dynamic relationship is
self-perpetuating, for as the pilgrim grows in strength, so too, grows that
which they desire and in so doing, new challenges are brought forward - and in
expressing the way, the pilgrim has cause to further desire and so on. All the
while, the love of moving and exposing rocks sustains the pilgrim’s
requirement for joy and becomes the ultimate reward in life. (end article by
John & Melody Anderson)
Rocks are our greatest motivators. With them in our lives
we find the inspiration to go on. Without them life does not reach the levels
of fulfillment that we so strongly desire and need to live.
A simple analogy and a very powerful one at that. Take some
rocks and find a space for them near to you and use this as a quiet reminder
of the need for us to have challenges and obstacles jump out at us everyday.
Just as we need to be confronted by problems and concerns to keep us alive and
awake and thinking, we need the constant state of Rocks.
I once took a group through a session that looked at the
question, “What is a problem?” They were asked to split up and ponder this
question and come up with an answer. It wasn’t until they sat down and
thought about it that they really began to understand that their lives were
filled with problems every moment of the day - for a reason. Obstacles and
sometimes unbearable struggles present themselves at what appears to be a
steady and endless stream - for a reason. We are not meant to just breeze
through life for if we did, where would be the rewards?
Words are such powerful tools aren’t they. Challenges and
obstacles equally so. I hope you have enjoyed the article and until next time,
have a great week!
For any information you may require on personal development
training programs or professional and business skills development, please
contact me by email at Christina. Dodd@atasiam.com and if you have a moment
free, take a look at our website www.asiatrainingassociates.com
The Doctor's Consultation by Dr. Iain
Corness: The grumbling appendix - are you next!
by Dr. Iain Corness
A “grumbling appendix” is a very common condition, and
the ultimate cure is removal, called Appendicectomy (if you come from the UK
or Australia) or Appendectomy (if you come from America). The condition is
simply inflammation of the appendix, which we medico’s call appendicitis
(remember that “-it is” at the end of the word usually means
inflammation).
The appendix is a little “finger” shaped appendage that
hangs off the bowel and connects with it. It lives down in the right hand
lower side of your belly, so that is where you get the pains. Ruminants such
as cows have large ones, if size really matters! For us, it is also one of
those cute “vestigial” organs which has no apparent functional use these
days, but can give us lots of problems if things go wrong. And things often do
go wrong, with appendicitis being experienced by about 1 person in 500 every
year. Males suffer from this more than females and it can strike at any age,
though under two is exceptionally rare. The most affected age group is between
fifteen and twenty-four.
So what causes appendicitis? It is a form of infection
which is generally from the food passing through the bowels and can be
bacterial or even viral. Sometimes the poo (nice medical term) in the
intestine gets jammed into the appendix and causes the initial problem. Just
for the record, we call it “inspissated faeces”, just to make it sound
grander than it really is.
While the signs and symptoms of appendicitis are
straightforward, the diagnosis is not so easy as a number of other abdominal
conditions will mimic the symptoms of centro-abdominal pain which radiates to
the right lower side, nausea, low grade fever and occasional diarrhoea. There
is also the problem that the signs and symptoms can come and go - that’s why
it is sometimes called a “grumbling” appendix. From my medical student
days I can even remember the last ailment in the list that could mimic
appendicitis was the abdominal crises of Porphyria! I must admit that in 35
years of medicine I’ve never seen one!
There are some laboratory tests which can be done,
especially a blood test to see if the white cell count has gone up, and some
centres will perform ultrasound to try to differentiate what is going on
inside the belly.
The definitive “cure” is to whip out the offending
organ, and this is usually one of the first operations a young surgeon does on
his own. (Mine was a Russian seaman in Gibraltar and I think I was much more
worried and apprehensive than he was, but then, I knew how inexperienced I
really was. He didn’t!)
My old surgical boss always told me to make sure the skin
incision was as small and as neat as possible, because that was all the
patient had to go by to judge one’s competency. It didn’t matter what went
on inside - just make sure the outside looked good! This was particularly
important with young females and a 1 cm scar, level with the top of the bikini
bottom was the ideal.
Post-operatively the vast majority of patients do well and
are up and about in a few days, happily living without their appendix, but if
you’re having some grumbling gut pains, perhaps you should let the doctor
cast his practiced eye over it.
Agony Column
Dear Hillary,
Last night I performed an honourable act of swatting a
large mosquito that had settled on the shoulder of a bargirl. I used a
rolled up edition of the Pattaya Mail but I didn’t kill it on the first
strike so I whacked it again. I was then surrounded by a dozen angry Thais
wanting to punch my lights out. How was I to know that the ‘mosquito’
was actually a tattoo of a small butterfly? Why do girls have tattoos and
think it fashionable to turn themselves into walking comic books? I
recently went home with a girl that had so many pictures tattooed all over
her body that I didn’t know whether to cuddle her all night or frame her
and hang her on the wall. Do you have tattoos Hillary?
Mighty Mouse
Dear Mighty Mouse,
You always have so many questions you want answered,
I sometimes think you must have been a detective in your last life. Or
even in this one! Why do girls have tattoos? For the same reasons guys do,
my Petal. It isn’t gender specific. It is just to make life easier for
her relatives to identify her body after she falls off the back of a song
taew. To be serious, if you look at profiling, you will see that the age
to get the tattoo is between 18-20 and the common factor is a bellyful of
beer at the time. As far as your question, does Hillary have tattoos -
I’m sorry Mighty Mouse, but I do not have one blemish on my flawless
body, so you can’t walk around town trying to identify me from tattoos!
Dear Hillary,
What with all the suspicions of late as to who you
exactly are I am wondering if I witnessed your graceful presence whilst
shopping at Big C? Are you by any chance a rather striking, long legged
woman who wears glasses and has just had a blue rinse? The other reason I
paid so much attention was because you are a dead ringer for Dame Edna
Everidge. Only curious Hillary but if it was you then my advice is get
your roots done as it’s gone a bit two-tone. By the way they are all
cleared up now thanks to your wonderful advice a couple of years ago. Much
love.
Baz (formerly the wart man)
Dear Baz,
So the wart man returns! Though I am not sure I
should say welcome back. If I remember correctly, we had to destroy your
emails last time, just in case they had some of those nasty wart viruses
on them. I don’t know why there is this pressing need for readers to
identify me? Dickens 44 a few weeks ago draws me as Kevin, some dreadful
half-wombat creature from Australia and now you want me to be Dame Edna
from Down Under too? I can assure you, warty Baz, that I do not wear Edna
style glasses (and especially not in Big C) and I have never waved a bunch
of gladioli in my life!
Dear Hillary,
You recently responded to a reader who insinuated that
Thai women that socialise with foreigners were prostitutes (Heart to Heart
13 June). You suggested to this reader that he take a “quick trip to
Soho in London, Kings Cross in Sydney or Amsterdam.” These places are
well known red light areas where sin and debauchery is the norm. What
attraction would these locations have for a sweet and innocent choccie
munching, champagne guzzling female such as yourself? Does Hillary have a
sordid past of frequenting dens of iniquity? I must admit that I’m
tingling with lurid excitement awaiting your reply.
Mighty Mouse.
Dear Mouse (again)
Read the answer again, Petal, and put a cold towel
on the lurid excitement. I didn’t say that these places held any
attraction for Hillary, I said that these were places where the enquirer
could find prostitutes. As for frequenting dens of iniquity, I leave that
to people such as yourself.
Dear Hillary,
Thank you for your suggestion re the pig prodder. Wee
Nit (the adorable) is now in receipt of five electrifying prods per day,
and her Mars Bars have been deep frozen, pending possible despatch to
yourself. However, all is not quite bona. Wee Nit now drops her aitches
causing ‘Hillary’ to sound like ‘Ee Willy’! Or even on occasion,
‘Ee Willy too much!’ And follows this with ‘mai pen rai’! What can
I do? Indefatigably,
Mistersingha
(P.S. ’Tis now the 50th anniversary of your namesake
‘Sir Edmund’ standing astride a massive peak. I wonder if you have
ever stood astride a massive peak and if so, have these achievments (sic)
been celebrated?)
Dear Mistersingha,
I shall refrain from suggesting that you have been
imbibing a little too much of the beer named after you (or was it vice
versa)? Perhaps you and the adorable Wee Nit might be better off
discussing someone else, other than my good self. Have you tried getting
her to say Reveille? That should be a good ‘levelling’ exercise for
the young lady. By the way, your spelling is not getting any better
either, so again I suggest that some hours be spent on that, rather than
Nit’s elocution lessons. P.S. Sir Edmund stood ‘atop’, not astride
Mt. Everest. Hillary is not into such achievements, just because they are
‘there’.
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Camera Class: Don’t become
blinded by familiarity
by Harry Flashman
A few weeks ago I wrote about getting a different viewpoint
on the subjects you photograph - this week I am suggesting you find some
different views as subjects. As a serious photography project, this is one time
you do not need wide angle lenses, special filters or off camera flash guns. Any
old camera will do - even the disposable ones! And you will get photographs that
will keep your friends overseas interested and green with envy. Guaranteed!
So where are these earth shatteringly different subjects?
Actually, they are all around us. You see, living in Thailand, we have a
wonderful opportunity to photograph subjects which are totally beyond the reach
of the average photographer in the US, UK, or EU. There is only one problem in
recognizing these. It is called familiarity.
Think back to when you first came to this country - a
Thailand newbie. Everywhere you went you saw something different, something new,
something totally off the wall, something hysterical, something crazy and
something totally appealing. Now after a few years you don’t see anything like
that any more. Why? Because you have become too familiar with the everyday, but
still incredible, sights in this country. They have become commonplace. Four
people on a motorcycle - see that every day in America? Never. A dog in the
carrier of a bicycle. See that in England? Never. Somebody walking down the
street in the rain with a plastic bag on his head? See that in Germany? Never. A
motorcycle with a banana leaf as a rear mudguard in Maine? Absolutely never.
Those incredible sights are still here, but you have forgotten how incredible
they are.
Now even if you personally have decided to live your life out
in Thailand, you will still have relatives and friends back in your own
countries who will be as awed as you once were when you saw Thailand for the
first time. It is your responsibility to pass on that magical feeling to the
‘folks back home’. And the best way is with a photograph - as they say, a
picture is worth a thousand words.
So for the kinds of subjects you should try and capture I
will suggest a few different ways to show them at their best. Again, no special
equipment is required, only a good eye! First, for all those incredible shots of
people on motorcycles, complete with the family and the family pooch, try
getting someone to drive, while you photograph from the passenger seat. You will
get all the action, hair flying, dogs with their ears laid back and the like,
and you do not have to worry about fast shutter speeds or anything even vaguely
technical. Since you are travelling at the same speed as the motorcycle, from
the camera’s point of view the subject is still. Simple! And you will get
great shots that you cannot get anywhere in the western world. Only trick is to
wind the window down first (or the autofocus won’t work) and don’t drop the
camera. Always have the camera strap around your neck!
If that all sounds too difficult, then don’t worry,
there’s still plenty of subjects to place in front of your lens. The local Wat
is one of them. Quite frankly, I could spend a day in some of the temples and
still not cover it all. However, here are some ideas. Some close ups of the
ornately painted pillars. The boat shaped containers with the lit candles. A
follower shaking the fortune telling sticks. Buddha images themselves - the shot
with this article was taken with available light at 1/30th of a second, so
easily hand-held. There is also the advantage that you are not disturbing
worshippers with bright flash bursts. (By the way, I deliberately left the
figure in the shot, to show some idea of the scale.) The orange robed monks
walking through the area - there is just so much.
Now you have a photography project for the weekend. Go and
photograph all the things that have become common-place, and amaze your friends!
Recipes from Rattana: Snowfish with Mushroom and
White Wine Sauce
This is a European recipe, and a popular dish in the south of France and
Monaco, often served with a Mornay sauce. It is presented here substituting a
very easy mushroom and white wine sauce.
Ingredients serves 4
Snowfish Fillets 4
Shallots 3
Dry white wine 300ml
Mushrooms 60gm
Butter 30gm
Salt and pepper to taste
Cooking Method
Finely chop the shallots and lay them on the bottom of a
buttered ovenproof dish. Lay the fish onto the shallots and season with salt
and ground black pepper. Pour the wine over the fish.
Cut the mushrooms into strips and gently cook for 3 minutes
in butter, then place over the fish, but keep the butter they were cooked in.
Cover the dish and cook in the oven at 180C/350F for 15-20 minutes. Now remove
from the oven and place fish in an ovenproof serving dish.
Heat the liquid left in the oven-proof dish until there is
half the amount then stir in a mix of two teaspoons plain flour and one
teaspoon of butter. Pour over the fish then drizzle the butter that the
mushrooms were cooked in earlier and place under the grill to brown. Serve with
rice.
Ask your local US Consul
Dear Consul,
I’ve been following the different accusations about
“racism” in getting U.S. visas that have come up in some of the
magazines and newspapers around here. I don’t know if that’s what I’d
call it. But there’s another part of it, too. My wife and I recently
applied for visas. She got one, which we were happy about. But I was told I
didn’t even need a visa (I’m Italian). These things cost so much,
isn’t it discrimination to make some people pay just because they’re
darker?
- Mai Fair
Dear Mr. Fair:
Of all the factors that enter into the visa decision (or,
more broadly, visa policy), I’m happy to say that skin color does not
appear on the list. The same is not true of your passport’s color,
however.
Citizens - of all hues - who hold passports from certain
countries and are coming to the U.S. for tourism only (not study or work)
for 90 days or less, do not need visas. You’re eligible to participate in
this visa waiver program (VWP) if you hold a passport from: Andorra (which
is allegedly between France and Spain, and is not a country we’re just
making up to boost our stats), Australia, Austria, Belgium, Brunei, Denmark,
Finland, France (or “Freedomland,” as pending U.S. legislation will
rename it), Germany, Iceland, Ireland, Italy, Japan, Liechtenstein,
Luxembourg, Monaco, Netherlands, New Zealand, Norway, Portugal, San Marino,
Singapore, Slovenia, Spain, Sweden, Switzerland, and the United Kingdom.
I can hear the immediate question from here: “What
about Canada?” No? Wasn’t your question? Well, since you’ve brought it
up, let me answer it anyway: Canadians, even freedom-Canadians, have a
special status that’s even better than the VWP. Our friends from the
frozen north don’t even need a passport to enter the U.S., as long as
they’re entering from the Western Hemisphere and can prove their
citizenship. How do you show that? Well, erm, a passport is usually a good
way. But in theory, all you need is a convincing “eh?” (and a birth
certificate, or something).
Ok. The question you’re probably really concerned with
is “why isn’t Thailand on the list, and what sort of [insert racist
theory here that would apply to Thais but not Singaporeans] is responsible
for that?”
In principle, Thailand could be. The VWP list isn’t
static; it DOES change. It wasn’t long ago that Uruguayans could travel on
the VWP; the country became ineligible only this past year, when economic
problems drove up the fraud rate. And other countries are reviewed for
suitability all the time. Before you start the petition drive, please know
that the State Department uses strict criteria to evaluate potential
membership in the VWP, including a low fraud rate and a refusal rate of less
than 2 percent. Yes, I know WE generate the refusals. Those are based in
part, however, on empirical studies of the overstay rates for different
countries. Direct that petition energy to stamping out fraud in Thailand,
and then we’ll talk (you can supply your own punchline as to the date
you’d be coming in for that; I’m not allowed to).
Mr. Fair, you’ll be pleased to know that we at the
State Department are keenly concerned about parity in the ease of travel of
citizens from VWP and non-VWP countries ... so we’re about to make life a
little harder for VWP folks.
Beginning October 1, 2003, all VWP travelers (those who
are entering the country, and not simply seeking transit without visa) must
have a machine-readable passport (MRP). Didn’t know machines could read?
They can if your passport has a two-line strip of digits along the bottom of
the page that has your biographical information. If your passport was issued
by your country’s embassy in a foreign land, however, it’s not likely to
be machine-readable. In your particular case, Mr. Fair, Italy’s domestic
passport agency only started issuing MRPs recently, so chances are you
don’t have one. In that case, you have the choice between applying for a
visa for your current passport, or getting a new MRP.
See you in 2053,
The Consul
Have a question about visas, passports, travel to the
United States, services for American citizens, or related issues? Ask the
Consul. Send your e-mail to acschn@state.gov with “ask the consul” in
the subject line. If your question isn’t selected, you can get an answer
by calling the Consulate at 053-252-629, from 8 to 4.
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