Long Term Financial Planning

[Kradmelder]

How many of you either do it yourself or have a financial advisor? I meet with mine at least once a year to look at 3 things:

1) If Im disabled today, what benefits do I have on my investments
2) If I die today, what deth benefits are there, what will I owe. is there enough to pay any debts, burial, and enough carry my kids to adulthood
3) What whil I retire with

All of these are more than sufficient. But a new issue has crept in. Estate Tax.If you have more than 3.5 Million, teh state takes 20% tax. he said my home and vehicles alone are almost there as they are fully paid. he forecasted by the time I retire at my current rate of growth I will well over 4 times that and the state will sieze millions, rather than have it go to my kids.

if I die tomorrow already I am already vulnerable to estate tax and I must start shedding assets. the afrikaans expression is distance yourself.

I hate this sort of stuff.

Some options he gave me.

1) Take a life insurance on myself to the value of wjat the estate tax will be so the benefits pay the tax. But that means all my premiums are for nothing and in effect go to the state. Apparently the premiums in total will be far less than the tax so I score. It certainly wont be millions in premiums, like the tax will be.

2) Open a trust. Donate my house and vehicles to the trust. The state cant touch that. He said that if I ever remarry then the wife also cant touch the house as she is not a trustee. That is a good idea because they can run off with your house so easy and your kids lose. With a trust I can make any condition as to who can be a trustee, like excluding any non blood descendant, hence no gold digger marrying one of my kids could ever get access to anything. he used the expression you cant rule from the grave but you can make conditions to minimise children making stupid choices

3) stop payments into my pension and make donations to the trust instead. But pension payments are non taxable, while I will be taxed on donations, unless to a regsitered charity. he said my pension is more than adequate and I dont need to pad it more and building it more means it is vulnerable if I die before retirement.

4) find some legal loophole to somehow transfer my existing pensions to the trust. he couldnt help with that and said that needs a lawyer. he said that would also protect my pension from a gold digger, divorcing and claiming half your pension just before you retire.

5) as soon as kids are of age, transfer the house and car to their name. But if they marry a gold digger they can then make demands on that.

Thought I had many many more work years to make such choices but apparently I dont. If I die on my bike now I will already be enriching the darkies and robbing my own kids.

Any of you clever with finances and have any ideas or know of other options?
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2011 KTM 990 Dakar
2009 BMW 1200 GS

[ninjabob]

Let me worry about it - give it all to me - I'll pray you live for another seven years.

Easy eh!

[LockyUK]

a trust, place assets in a trust that is a popular option in the UK, and inheritence tax is just one of them things, your children get taxed on there inheritance for your death, awesome ain't it

[Kradmelder]

[LockyUK]

[Kradmelder]

[daemonoid]

I don't get how option 1 works... Clearly if an insurance company is selling life insurance it's in it to make money in the majority of cases. Surely you're most likely to be better off if you keep the cash and invest it yourself?
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@thomasgarrard | www.straitjkt.com | www.racingseven.com

[thx1138]

I do it myself.

[Redoko]

If you pay someone to do this, why would you ask us?

I doubt the majority of the forum will never have to worry about excess financial issues.
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"Let's face it, this is not the worst thing you've caught me doing."
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[The Shaggy D.A.]

I intend to die heavily in debt.
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Chances are quite high you are not in my Monkeysphere, and I don't care about you. Don't take it personally.
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[Kradmelder]

[yambabe]

[Kradmelder]

[hellkat]

I'd go with the Trust and funeral protection policy.

Depending on what happens within your family, you can adjust things, but it wraps it all up out of the way of the government and doesn't affect your pension.

My mother keeps telling me how she's just a poor old pensioner, but she lives in a house worth about $NZ1.2m, has two smallish businesses which she runs easily herself (at 73 years of age), and she runs a newish car. Nice. When she snuffs it, I'm on the next plane over to "babysit" the house

I'm currently working in the NHS which means not only that I have to put into a pension "savings" scheme that I might never see - but at least if I peg out whilst still working there, my beloveds get 2 or 3 times my salary as a "death in service benefit". So I know they will be able to put me down decently without worrying about the cost.

But then again, here's my idea of an ideal trust:
Trust nobody except yourself.
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Not nearly as interesting in real life.

[Kradmelder]

[hellkat]

Accountants and/or lawyers are a necessary evil.

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Not nearly as interesting in real life.

[Bendy]

[Derivative]

SA law probably differs from UK law significantly. Tax law is generally ridiculously complex for obvious reasons.

In the UK, Inheritance Tax only applies to transfers on death or within 7 years (tapering off).

In terms of 'protecting their assets', i.e. transferring your children wealth but retaining control over it - in essence that's not possible as far as I'm aware.

Instill financial discipline and ensure they realise the concreteness of marriage? Are there any benefits to marrying in SA?

SA currency is confusing to me. 10 Million Rand sounds like a lot, £700k much less so.

[angryjonny]

[Kradmelder]

[angryjonny]

I'm not saying you don't need to stress about it. I'm saying we don't need to stress about it. And those of us who do aren't really that familiar with South African tax laws anyway.

Most tax avoidance schemes in the UK involve moving it all offshore. If your cash is in Blighty then there's very little by way of loopholes and avoidance becomes evasion = jail time. Yes you can set up a company, pay yourself a pittance and "expense" everything on some tenuous business-related link but that's not how you handle big-bucks; that's how contractors on 100k save a few quid.

If you've enough readies to justify the fuss you can ship it all to the Cayman Islands and avoid paying tax that way; this leaves the offshore-loopholes open for all the cabinet millionaires and their cronies but closes them off to Joe Public.

But if you've got a financial advisor and still feel the need to come to the UK biking forum that introduced the world to nobcat to ask for financial advice you probably need to get a new financial advisor.

[Kradmelder]

[angryjonny]

[kawakid]

In the UK we do have a security net from the state and it can be very generous. Which if you were disabled would mean free care etc, plus we have the NHS.

From my point, I'm 40 I have paid the mortage off. I contribute 10% of my income in to my pension, Work 6 me 4.

At retirement age the minimum pension will be in todays money £144 per week. I'm married and its per person so £288 plus my private pension and the wifes council pension we should be okay. Saying that I really doubt I will make 68.

Talking about wealth is a big no no where I live. It really does not go down well.
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I've a twin and a 4.

[Kradmelder]