Article by: Nipapan Poonsatiansup CFP®

 It’s a common misunderstanding that inheritance reserved only for the riches and it doesn’t concern them. This misperception should be corrected because it matters to anyone, not just wealthy people with many assets. Planning for inheritance is important and should never be overlooked, regardless how much asset you possesses.

Inheritance planning is a plan to handover your assets to your heirs properly and efficiently. The following are the reasons why: 

1. To make sure assets are passed on precisely as planned, especially for business owners who have many successors. Inheritance should be explicitly planned  and detailed of what and who should receive a particular asset to maximize its benefits.
2. Streamlining handover processes efficiently and in a timely manner. Without a good planning, times are wasted on the formality of court order to appoint an executor. There are potentially lawsuits between beneficiaries to nominate themselves as an executor. Consequently, household cashflow would stalled if owner of assets was a head of family or a sole breadwinner.
3. Tax planning to manage payable inheritance or gift taxes.

STEP2: Study laws related to inheritance taxation and gift taxation

The principle of maximizing inheritance are:

• Estate tax incurred when assets passed on to beneficiary after the decedent’s death.  Inheritance assets are subjected to taxation by law. For example, according to the law enforced in 2017, the tax-free threshold is 100 Million THB, any exceeding amount is subject to inheritance tax of 10% for non-related recipients and 5% for ascendants/descendants. The values of taxable assets are calculated from estimated price for real estate and closing price of transfer date for securities. 
• Gift tax incurred when properties are transferred to successor when owners are alive. Gifts are divided into movable properties and immovable properties. Gift value exceeding a specific amount stipulated by law is assessible for personal income tax. The following are the examples of 2017 Tax law.
  
  • Movable properties gifted to non-related recipients, any amount exceeded 10 million THB is subjected to 5% tax and 5% of taxable portion of any amount exceeded 20 million THB when the gift given to lawful heirs or relatives out of affections.
  • Immovable properties gifted to lawful descendants excluded adopted children are subjected to 5% tax of an asset value portion that exceeded 20 million THB.