Panama Private Foundation

The "PANAMA PRIVATE FOUNDATION" is an innovative legal concept revolutionizing the asset management world, inheritances, and wills. This entity was created by Panamanian lawyers in 1995 in response to a worldwide need for an easily managed entity with a simple registration process and more flexibility than similar systems used worldwide for the administration of patrimony and asset protection. The Panamanian Private Interest Foundation has successfully competed with countries with "Common Law Trust" traditions and with "Familien Stiftungen" in Germanic countries with civil law.

A person (natural or legal), as the Founder, "creates" a legal entity to transfer assets (real estate, shares, accounts, etc.) into it. In turn, this legal entity manages these assets with a "council" in favor of particular beneficiaries, who have been appointed in a private document known as "bylaws."

All this structure is established in a public document known as the "Foundation Charter," jointly with a private one known as "Regulations or Bylaws." Additionally, it allows for different types of asset protection or inheritance options with a Private Interest Foundation.

A "protector" figure can be appointed to execute the bylaws for the Beneficiaries. Upon proper formation, the client could initiate the process of transferring assets or opening a bank account on behalf of the Panama private foundation.

Given that the common law trust has been the most widely used system for asset protection for centuries, and perhaps you are more familiar with this kind of entity, it is essential to understand the differences and similarities between it and a Private Foundation when considering the formation of such asset protection tools in Panama. Nowadays, both entities are used worldwide as tools for asset protection and testamentary structures, but each of them has remarkable differences:

In a trust, the assets are transferred directly into the name of the trustee. In contrast, with a Panama foundation being a legal person, the assets are transferred into the name of the foundation itself.
In a trust, the trustee is usually one or several 'professionals,' but in a foundation, the 'trustee' is the 'foundation Council,' which could be a professional, a legal entity, or three natural persons.
In the common law world, a trust is considered an 'agreement,' whereas a Panama foundation is a 'legal person' itself.
Trust law does not protect against future claims against the settlor from creditors. The Private Interest Foundation law has very clear provisions limiting claims against the founder.
Both a trust and a foundation are regularly used to buy real estate, manage bank accounts, investment accounts, stocks, and mutual funds, and as a testamentary system to distribute family wealth.

You could achieve asset protection, privacy, and a testamentary plan.
No payment of taxes within the Republic of Panama.
It has a flexible formation that allows you to achieve private control of your assets.
No annual tax return on foreign income.
No taxes on local bank profits.
No paid-up or start-up capital is required.
No perpetuities rules or minimal capital.
Members may be individuals or corporations of any nationality.
Once the due diligence forms are completed, the formation can be done in approximately 1 week.