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HEADLINES [click on headline to view story]:

Family Money

Personal Directions

The Doctor's Consultation by Dr. Iain Corness

Agony Column

Camera Class by Snapshot

Recipes from Rattana

Family Money: Leaving It All Behind You – Part 2

By Leslie Wright,
Managing director of Westminster Portfolio Services (Thailand) Ltd.

Wills

To plan for what happens to assets after someone dies, making a will is an obvious way to limit IHT liability. One of the best-known UK exemptions is gifts between spouses. However, what many married people fail to realise is that if one half of a married couple is domiciled in the UK but the other is not (e.g., you have a Thai wife), then the exemption only covers the first ฃ55,000 of the estate.

Another common pitfall married couples fall into is leaving their entire estate to each other. Admittedly there would be no IHT on the first death, but this would increase the assets of the surviving spouse thus making a bigger taxable estate when she/he dies, and the children and other heirs would be facing a nasty big tax bill. The nil rate band at the first death would have been completely wasted.

A good way round this is for the person making the will to leave an amount equivalent to the nil rate band to their children, in trust, on the death of the first spouse. A reduced amount of tax would then be payable on the death of the second spouse.

Where this becomes problematic is when a property is gifted but the owner continues to live in that property without paying the full market rental. In this case, the Inland Revenue (IR) deems it a gift with reservation of benefit and it is still classed as part of the estate.

“Gift with reservation occurs if you give something away but continue to enjoy that asset in any form whatsoever,” says one expert tax planner. “In IHT terms, the gift is deemed never to have left your estate in the first place so rendering the whole process ineffective.”

Trusts

Trusts are the most common way to mitigate IHT liabilities. In a flexible trust, assets are held for the benefit of a class of beneficiaries defined in the trust deed. The trust is created by an individual (the settlor) who transfers assets to one or more trustees who in turn hold the assets for the beneficiaries.

Discretionary trusts allow the trustees to distribute assets and income at their discretion. They are useful if it is inappropriate to make lifetime gifts direct to the next generation. If the trust is set up for only the unused balance of the nil rate band there need be no IHT payable on creation. There will be a further charge every ten years and as assets leave the settlement, but this is minimal.

Accumulation and maintenance trusts are discretionary trusts in which all the beneficiaries must become entitled to their share of the assets on or before the age of 25. These are hybrid discretionary trusts for children and grandchildren. They have some of the advantages of an ‘interest in possession trust’ in that they don’t attract a charge when you transfer the assets in the first place, but they also have the flexibility of a discretionary trust.

Offshore trusts can be set up for some investors, particularly non-domiciled residents in the UK. Although much thought and care needs to be given to income and capital gains tax issues, running costs, and how assets will leave the settlement in the fullness of time, offshore trusts can be an extremely effective IHT planning route for this type of investor. They can enjoy income and/or capital from the trust while it remains entirely outside of the UK IHT charge, regardless of what happens to their personal domicile.

“The use of offshore trusts for a non-domiciled person is almost essential,” says one expert advisor. By virtue of putting assets into trust when the person is not UK domiciled, the assets in that trust are then perceived as excluded property. If the investor plans to stay in the UK for a long time and attain UK domicile, they transfer their offshore assets into the trust.

Offshore trusts are not suitable for investors already resident and domiciled in the UK, however, as there is virtually no income or capital gains tax benefit from doing so. Many UK domiciled clients have to be talked out of setting up offshore trusts, believing erroneously that this is the answer to all their problems. It isn’t: it can be the start of them. When they are made to understand the tax consequences, they quickly realise that offshore trusts are not a good option for onshore residents. For IHT planning, concentrate on wills, lifetime gifts and insurance policies.

Will trusts

Transfers to your spouse are always exempt, whenever you make them. But transferring everything to your husband or wife won’t reduce tax – it will just defer tax on the whole amount until he or she dies. In effect, you will have wasted your ฃ255,000 nil-rate band.

There is a way to use the nil-rate band, though, and let your spouse have the benefit of the assets: setting up a will trust. This lets you transfer up to ฃ255,000 to other beneficiaries within the nil rate band, leaving any remainder to pass tax free to your spouse – and your trustees can then ‘lend’ all or part of the ฃ255,000 to your spouse for his or her lifetime.

It’s a plan that lets married couples take advantage of each of their nil rate bands, and ensure the surviving spouse can still benefit from the income and capital value of the assets.

Loan trusts

Gifts or transfers in your lifetime have to be genuine to become exempt – which means you can have no beneficial interest in them. So you can’t go on receiving income or capital from your investments and make them exempt from tax.

There is a way round this, though: using a loan trust. You effectively lend capital to the trust, which freezes the value of your investment for inheritance tax purposes. The original capital remains in the estate, but the beneficiaries gain from the growth on the investment as it is free from inheritance tax. You can take an annual income of up to 5% of your initial investment, free of income tax at the time of payment, in the form of a loan repayment (to you). It’s an effective long-term inheritance tax plan that still gives you access to the capital invested.

This type of tax planning suits clients with complicated requirements, as the solutions are often more flexible than those within packaged products and can be tailored specifically to an individual’s requirements.

But as with most things, try to follow the ‘KISS’ rule: keep it simple, stupid.


Personal Directions: Focus on the donut, not upon the hole

By Christina Dodd,
founder and managing director of Asia Training Associates

Recently I held a seminar for young entrepreneurs who were feeling a little tired and weathered having gone through some difficult times in their businesses. They needed to “get back on track” and so we had two intensive days of doing just that!

One area that we devoted a lot of time to was goal setting. I know I have talked about the importance of goals and setting goals in previous articles, but I cannot stress it enough as being one of the major reasons as to why we can succeed and have enriched, meaningful and happy lives.

I have read many books on the subject and Shiv Khera, whom I have referred to previously, puts it so much better than many writers out there. He has some enlightening words on the subject and I hope you enjoy them and gain from them just as I have.

“Knowledge helps you to reach your destination provided you know what the destination is.

An ancient Indian sage was teaching his disciples the art of archery. He put a wooden bird as the target and asked them to aim at the eye of the bird. The first disciple was asked to describe what he saw. He said, “I see the trees, the branches, the leaves, the sky, the bird and its eye.”

The sage asked this disciple to wait. Then he asked the second disciple the same question and he replied, “I only see the eye of the bird.” The sage said, “Very good, then shoot.” The arrow went straight and hit the eye of the bird.

What is the moral of the story? Unless we focus, we cannot achieve our goal. It is hard to focus and concentrate, but it is a skill that can be learned.

On the journey to life’s highway, keep your eyes upon the goal. Focus on the donut, not upon the hole - Anonymous

Keep your eyes upon the goal

On July 4, 1952, Florence Chadwick was on her way to becoming the first woman to swim the Catalina Channel. She had already conquered the English Channel. The world was watching. Chadwick fought the dense fog, bone-chilling cold and many times, the sharks. She was striving to reach the shore but every time she looked through her goggles, all she could see was the dense fog. Unable to see the shore, she gave up.

Chadwick was disappointed when she found out that she was only half a mile from the coast. She quit not because she was a quitter, but because her goal was not in sight anywhere. The elements didn’t stop her. She said, “I’m not making excuses. If only I had seen the land, I could have made it.”

Two months later she went back and swam the Catalina Channel. This time, in spite of the bad weather, she had her goal in mind and not only accomplished it, but beat the men’s record by two hours.

Why are goals important?

On the best sunny day the most powerful magnifying glass will not light paper if you keep moving the glass. But if you focus and hold it, the paper will light up. That is the power of concentration.

A man was traveling and stopped at an intersection. He asked an elderly man, “Where does this road take me?” The elderly person asked, “Where do you want to go?” The man replied, “I don’t know.” The elderly person said, “Then take any road, what difference does it make?”

How true. When we don’t know where we are going, any road will take us there.

Supposing you have the football eleven enthusiastically ready to play the game, all charged up, and then someone took the goalpost away. What would happen to the game? There is nothing left. How do you keep score? How do you know you have arrived? Enthusiasm without direction is like wildfire and leads to frustration. Goals give a sense of direction.

Would you sit in a plane or a train without knowing where it was going? The obvious answer is no. Then why do people go through life without having any goals?

Dreams

People confuse goals with dreams and wishes. Dreams and wishes are nothing more than desires. Desires are weak. Desires become strong when they are supported by:

* Direction

* Dedication

* Determination

* Discipline

* Deadlines

That is what differentiates a desire from a goal. Goals are dreams with a deadline - and an action plan. Goals can be worthy or unworthy. It is passion, not wishing, that turns dreams into reality.

Why don’t more people set goals?

1. A pessimistic attitude - always seeing the pitfalls rather than the possibilities.

2. Fear of failure - What if I don’t make it? People feel subconsciously that if they don’t set goals, and if they don’t make it, then they haven’t failed. But they are failures to begin with.

3. A lack of ambition - This is a result of our value system and a lack of desire to live a fulfilled life. Our limited thinking prevents us from progress. There was a fisherman who, every time he caught a big fish, would throw it back into the river, keeping only the smaller ones. A man watching this unusual behavior asked the fisherman why he was doing this. The fisherman replied, “Because I have a small frying pan.” Most people never make it in life because they are carrying a small frying pan. That is limited thinking.

4. A fear of rejection - If I don’t make it what will other people say?

5. Procrastination - “Someday I will set my goals.” This ties in with a lack of ambition.

6. Low self-esteem - Because a person is not internally driven and has no inspiration.

7. Ignorance of the importance of goals - Nobody taught them and they never learned the importance of goal setting.

8. A lack of knowledge about goal setting - People don’t know the mechanics of setting goals. They need a step-by-step guide so that they can follow a system.”

For more insights into Goals and SMART goals, catch up with me next time or contact me at Christina. [email protected]

Until then, have a great week!


The Doctor's Consultation by Dr. Iain Corness: Great Expectations

by Dr. Iain Corness

No, this is not an article on waiting for your next generation to appear after nine months, this is more of an article on what to expect as a patient in a foreign land. At my office in town, I will often receive ex-pat patients, all clutching a large plastic bag full of brightly coloured pills, and saying, “Which ones do I HAVE to take, Doc?” They will also say that they do not understand because they did not get so many tablets or medications when they went to see the doctor in the western world, so why do they get so many here? Is it that the local doctors don’t know what the diagnosis really is and what they should have, so they give them a little of everything?

The answer to all this is in the differing expectations of different cultures, and nothing to do with training, expertise or ‘blunderbuss therapy’. When I worked in Spain I noticed that all the patients would bring a bottle of urine with them to the clinic. This seemed to have no bearing on the presenting symptom in any way whatsoever. Fortunately, I mentioned this quite early in the piece to a senior colleague, who told me that the Spanish people ‘expected’ me to examine the urine, and if I didn’t they felt ‘short-changed’ after the consultation. The examination was not expected to be microscopic, but a simple holding of the bottle up to the light, with a sage muttering of “Orina bien” (pee looks fine) was all that was necessary. Expectations had been fulfilled.

In Thailand there are also cultural expectations, and again these are not western ones. Probably more through a ‘value for money’ concept, the Thai people expect to get their large bag of pills, tablets, capsules and potions. If they don’t, they feel ‘short-changed’ just like their Spanish cousins. Their ‘expectations’ have not been met.

In the west, it is different. If you had not noticed before, compare the prices of the medications in western countries, with their cost here. Sure, some of the drugs are ‘copy’ drugs made here or in India, with or without license, but they are much cheaper. Even in Australia, with a subsidized pharmaceutical benefits scheme, costs are in the main much higher. The thrifty Australian patient then only wants to buy those medications that are absolutely necessary for his ailment. Paracetamol painkillers, he will buy in small quantities himself when needed, and at the local discount supermarket too. He does not need the doctor to expensively prescribe these to be purchased on prescription at the friendly neighbourhood chemist, to help keep the chemist’s Porsche in fuel, oil and rubber. ‘Expectations’ at the opposite end of the spectrum from the Thai expectations.

Now the following may come as a startling fact to many ex-pats. This country we live in is called Thailand and the inhabitants are called Thais. This is not England or New Zealand or Holland or Lapland. I repeat, it is Thailand. The medical delivery system in this country has evolved to cater for the needs of the vast majority of its inhabitants. The Thais! Not the farangs.

So where does that leave us farangs? Well, some of the more enlightened private hospitals with international departments and internationally experienced doctors do understand the cultural differences and thereby cultural expectations, and try to accommodate our strange western ways. The others will give you a large bag of pills! So now you know!


Agony Column

Dear Hillary,

I have only just noticed that you published my letter regarding Caring Chris (issue 10th May). Problems with GF all sorted out now as she has a very generous (“jai dee”) German sponsor, but still she insisted on calling all of our mutual friends to find out what I was doing where I was staying etc. Thankfully none of our mutual friends furnished her with any information whatsoever (or so they tell me). Apparently now she also travelles (sic) a lot Hong Kong, Singapore. A damaged soul. Funnily enough I managed to loose (sic) my “keenow” self and blew circa 200,000 bhat (sic) on wine woman and song. Never had any problems with girls getting possessive all of ‘em knew I was a butterfly who “put Thai geng mackma” didn’t bother them in the slightest. Only problems I had this trip was the fact that most of my companions didn’t get much sleep due to my ogre like snoring. Have you any suggestions on how I might solve this problem as I will be back in the land of smiles in about 6 weeks and would like for my companions to get a little bit of sleep and not be woken up at 4 in the morning with complaints. By the way, my previous letter to yourself was penned at about 4 in the morning after consumption of various different alcoholic substances which left my spelling a lot to be desired. As I’m typing this I am trying to get over the hangover of all hangovers as well as my Jet Lag so apologies for my spelling yet again.

Not Anon

Dear Not Anon,

Yes, I do remember you very clearly (and your abysmal spelling, which as you so correctly point out, is no better). You were the generous gentleman who bought your girlfriend a pair of glasses and the odd movie ticket in something like three years. Ah yes, the very heart and soul of munificence, my Petal. And then you wanted to know how to tell her you didn’t want her any more. She was one lucky girl, and now with a truly generous sponsor who helps her fly around the world. Lucky girl, in more ways than one. A damaged soul? Why would you say that? Though I must admit jet planes do play havoc with one’s skin. I always use lots of moisturizers. But back to you and your snoring problem. I notice that 4 in the morning seems to be a very bad time for you. Snoring, complaints from companions, letters written while under the influence, or written while getting over hangovers after having been under the influence, jet lag and goodness knows what else. I would strongly suggest that you remove the “4” from the clock and go straight from “3” to “5” and all your problems will be over.

Dear Hillary,

Here is a print of the painting I did of the imaginary you sharing a bottle of vintage champagne with the half-wombat at an exotic tropical lounge on the beach. Please don’t be prejudiced towards half-wombats, they have good hygiene, their fur smells good and although easily aroused, are generally delightful companions. This scene shows you enjoying a little affectionate horseplay with the half-wombat. In addition, while engaged in the wombat-play, you are performing an advanced-precision adopted rhino control technique in which you rhythmically dangle your right shoe from your toes in a hypnotic fashion, causing the young orphan rhino to remain calm and motionless. In the lower left, a lady server person is bringing a box of excellent Estonian chocolates to your table next to the half-wombat’s dad. In the middle sits a heavily damaged computer, attacked by a hacker, while an anxious Frisbee dog waits for you with an alien guitarist. The upper left of the painting is occupied by Death on a break, next to the Hen of Happiness, which is looking over your shoulder. I was gladdened to hear you don’t have tattoos, but saddened because you seem to indicate that healthy exercise and diet are not included in your program - it’s never too late! If you use any of my art in your book, I think at least you should give me an ex-pat discount or some chocolates!

Dickens 44

Dear Dickens 44,

Thank you for your print, the detailed explanation (which I had to shorten, I’m sorry) and the ‘new-age women’s candy bar’, which I have to unfortunately tell you tasted like a dog biscuit, or perhaps something one would feed to half-wombats! Despite that, I must admit I did devour the 180 calories and cholesterol free candy in one sitting. I must also take you to task on the hygiene and smell aspect of these half-wombat animals. Your half-wombats must have different other halves to the ones I have seen, Petal. Disgusting! The dangly bits are so untidy. Be assured that if any of your art finds its way onto the pages of my embryonic book, you will receive ample credits and a ‘new-age men’s candy bar’ as well!


Camera Class: Scale the heights!

by Harry Flashman

For many camera owners, getting their snaps back from the photo-processors is a time for mixed emotions. 90% disappointment and 10% frustration. If that includes you, read on!

Note that I said “camera owners” because there are far more owners of these costly devices than there are dedicated enthusiasts. This was really hammered home to me the other day when I loaned a camera to someone who needed to take some shots at a function, and whose own point and shooter had just died. My camera that I loaned out was a Nikon FA, the only one in my camera bag that had an “auto” setting. There was not enough time to teach a fully-auto camera user the complexities of aperture and shutter speed complexities!

Next problem was focussing - today’s user has been raised on auto-focus, so there was a quick lesson needed there. Next was loading (no auto-wind on) and unloading (no auto-rewind). Unfortunately, the FA, whilst still being an excellent work-horse in an enthusiast’s hands, is a dinosaur and an impossibility for today’s amateur photographer.

So why with all these great features on today’s cameras, are today’s photographers disappointed with their results? Quite simply because the problems are no longer technical woes, but are “artistic” problems. You see, the one thing the camera cannot do for you (yet), is to “see” the final result in its electronics and crop, move, tilt, move in, move away automatically to get the pleasing end product. However, this week, I will help. Continue reading!

Take a look at the first photograph with the article. It was taken at Ayutthaya in the middle of the day (worst time) and was taken at the request of the young lady to have her photo taken in front of the temple ruins. I positioned the camera so that I could get the entire monument in the frame, from the spire to the base, plus a little foreground, and then asked the subject to walk towards me, so that I could make her the ‘hero’ (or I should say, heroine) in the shot. She was shy and wanted to stay where she was, so I took the shot anyway, knowing that as a human portrait study it would be disappointing - but also knowing that as a shot of the monument, it would work. Why? Because this shot would demonstrate scale. This shot would show just how tall the edifice really was, by being able to compare it to a human being of average height.

If you don’t believe me, place a thumb over the figure and look at the shot of the ancient structure again. How tall is it? How small is it? You have no idea, without someone or something to compare it with.

So today’s great tip is that when you are photographing some ‘thing’, include some other ‘thing’ that is recognisable which can then show the comparative size. For buildings, a person is wonderful, because we all know how tall we are! For small objects, you can always include a cigarette lighter, a beer glass, a teacup - get the idea? Something well known that will show comparative size. Take a look at advertising brochures - they will very often have a common object included, so that you can judge just how “large” the large economy size really is! The second shot of the Chinese food is a classic example of this. By including the menu in the shot, the viewer can see that this is a large dish of food!

So always remember, that when you want to show “size” include an object whose size you can compare to. Simple!


Recipes from Rattana: Khao Pad Gai

Thai fried rice is a very simple dish that you can have cooked for you on any street corner. The choice of meat is open, and prawns or squid can also be used. The one chosen for this recipe was chicken, probably the most usual. The secret with this dish is to use the steamed rice left over from yesterday which you have stored in the refrigerator. Do not use hot steamed rice.

Ingredients serves 2

Cooked long grain rice 2 cups

Oil 1/2 cup

Chicken (bite-size pieces) 1 cup

Fresh eggs 2

Chopped onions 1/2 cup

Chopped tomatoes 1/2 cup

Ketchup 2 tbspns

Maggi sauce 2 tbspns

Shallots, cut 2 cm pieces 2 tbspns

Chopped coriander leaves 2 tbspns

Cucumber 10 slices

Sliced fresh chillies 2 tspns

Lime juice to taste

Cooking Method

Fry eggs in oil to desire firmness. Remove from oil and set aside.

In the remaining oil, fry onions with pork or chicken pieces over high heat until cooked. Remove the meat and onions and set aside.

In the remaining oil, combine the rice, chopped tomatoes, ketchup and Maggi sauce and mix well. Return the meat and onions to the rice and heat through.

Transfer the fried rice to a plate and sprinkle shallots, coriander leaves, chillies and lime juice. Top with fried egg and place cucumber to one side.