If you thought financial planning was simply a question of saving as much as you can offshore and being heavily insured, think again.

Designing a long term financial plan to meet the future costs of both the expected and the unexpected is a core part of financial planning.

However, there are other equally important considerations in planning for long term financial security, especially for people with families or other dependants, as well as business owners.

Estate planning combines asset protection and succession planning, while asset protection legitimately places your assets beyond the reach of third parties such as former spouses and life partners, business associates, creditors and anyone else who could make a claim against your estate.

Asset protection is also used to legitimately mitigate, or even eliminate, tax liabilities.

Succession planning ensures that when you die, your assets pass to those people you want them to go to in a way that legitimately mitigates or eliminates the taxes which are triggered by death.

Succession planning also provides safeguards to beneficiaries who may not be equipped to manage what can be relatively large inheritances.

One of the most practical solutions is to make a will, which is your written instructions for the disposition of your estate when you die.

A will is a reasonably good way of ensuring that your estate passes to the people you choose, and ensures that your estate is not distributed in accordance with local intestacy laws.

It can also ensure that surviving life partners who are not legally married are provided for, because intestacy laws usually make no provision for anyone other than a legal spouse of the opposite sex.

But wills can be subject to challenge in some countries.

In France and other countries where legal systems are based on Roman Laws, wills are more or less meaningless due to the existence of very strict Forced Heirship laws which set out almost precisely how the estate of a deceased person MUST be distributed.

Furthermore, for people who are subject to inheritance or death taxes either due to citizenship, country of residence or location of assets, a will can still leave the dead person’s estate exposed to these taxes.

Transferring assets into an offshore company, trust or foundation can often meet all of the estate planning needs of most people.

Over the next few months, we will look at these three options in detail, but broadly speaking they all work in much the same way, in that someone legally transfers their assets in one of these three structures.

This means their death will not then trigger an Inheritance Tax liability.

It also means that when someone dies in a country with Forced Heirship laws, assets which have been legitimately transferred out of the deceased’s estate and away from her/his home country can be placed beyond the reach of such laws.

Assets which have been put into a trust, foundation or offshore company often have far greater protection from third party claims than if the assets were held personally.
This applies both in life and after death.

The three different options don’t all provide the same level of protection, and recommending the best structure for estate planning will depend on the place of residence, the type of assets, the location of the assets, and the citizenship.

One of the most consistently overlooked aspects of financial planning is the provision of effective financial management for the surviving partner or spouse or other beneficiaries.

Not all beneficiaries are capable of managing their financial affairs effectively
and wisely.

Trusts and foundations in particular can include provisions which prevent beneficiaries from taking ownership of assets until they reach a minimum age; although in some cases, such restrictions may be prudent regardless of the age of the beneficiaries.

At the same time, other provisions can ensure that your loved ones receive income for their day-to-day living expenses, education and any other circumstances you might want to specify.

Sometimes the best legacy can be the legacy of a protected inheritance.

It is the task of tax collecting authorities to extract all of the tax to which they are legally entitled, but it is your right to part with no more money than you are legally obliged to, which for some expatriates is nothing.

It’s your money and your peace of mind.

Richard Colburn Cert PFS is a UK qualified financial adviser and Managing Director of Sterling Assets, a specialist wealth management consultancy serving the expatriate community in Thailand and the Far East.

For further information, call 076 326 301, email phuket@sterling-assets.com or visit www.sterling-assets.com