One of the world’s best means of asset protection is a Panama private interest foundation. A Panama private interest foundation is an effective holding entity for assets. What follows is an overview of how such an entity works and how to set one up. As with all legal matters consult a competent authority to set up and maintain a Panama Foundation. Deal with or through someone who speaks your language. Make sure that you understand every step you take and why you are taking it. That having been said let’s start with what it will cost.
Cost of a Panama Private Interest Foundation
- $300 per year to government, typically less than $400 a year to attorney
- Minimum Capital Investment: $10,000
- Attorney cost to set up: Less than $2,000
These are typical costs. Part of this is payment to the government and part is to the attorney. If prices you are quoted seem to high don’t be afraid to comparison shop. By all means make sure that you are comfortable with whom you deal with from the outset as these entities are meant to last for a very long time.
What a Panama Private Interest Foundation Is Used For
Use a Panama foundation as a holding entity for asset protection and privacy. Overseas assets of a Panama foundation are not taxed in Panama. The only taxation related to a Panama foundation would be if the foundation owned a business operating in Panama. In that case the business would be taxed, not the foundation. The foundation could receive post-tax dollars from the business. Consider joining a foundation with an offshore corporation, in Panama or elsewhere, for increased asset protection.
A Panama foundation can own assets anywhere in the world. This includes bank accounts, patents, real estate, companies, personal assets such as airplanes, cars, etc., royalty rights, stocks and bonds, and collectibles such as coins and stamps as a partial list.
An example of the asset protection of a Panama private interest foundation is that there is a three year statute of limitations on “fraudulent conveyance.” That is after three years no on can successfully challenge you in a Panamanian court for transferring assets to the foundation. Thus a Panama foundation will provide long term asset protection free from challenge of foreign jurisdictions after the initial three year period.
The Foundation’s assets can only be frozen if the foundation itself is accused of doing something illegal it its own business dealings. Standard advice for a Panama foundation is to use the foundation as a holding company. If a company owned by the foundation has to deal with legal issues they do not spill over into other foundation business.
Attorneys in Panama often suggest a Panama private interest foundation as a means of protecting you again a foreign attack on your assets as well as any possibility that Panama might ever change its laws regarding foreign ownership.
A Panama Foundation cannot engage in commercial activities in Panama but it can own a business that does so. This rule is strictly meant to prevent use of the corporation to avoid paying taxes on income derived from a business in Panama. With a Panama foundation and/or corporation you can still invest in Panama but not tax free.
A Panama private interest foundation can continue in existence to provide asset protection in Panama for 120 years.
The Cast of Characters in a Panama Private Interest Foundation
Panama Foundation Founder
A Panama foundation has a founder. This need not be you. This is the person who files the papers with the public registry in Panama to register the foundation’s existence. Typically the law firm that sets up the foundation for your will hire a person who does not know you to file the papers. This person has no knowledge of the assets or activities of the foundation and no control.
Panama Foundation Council
A Panama foundation has a council. Each member is recorded in the public registry in Panama. The council members need not know the identity of the beneficiary nor protector of the foundation. Each council member provides you with an updated letter of resignation. The foundation can be set up so that council members have no control over assets and no banking privileges. The primary purpose of the council is to appoint the foundation’s protector by means of a Private Protectorate Document. This document is not registered anywhere.
Panama Foundation Protector
The Panama foundation council appoints the protector. Then the council can be replaced. The protector’s identity can be kept out of public records.
The control of the foundation is exercised by the protector. After being anonymously appointed by the council the protector may remove and change the council.
The protector produces a private written set of instructions which is not placed in any public registry. These instructions describe what the foundation does and how it will do it. The beneficiary can change with circumstances.
Panama Foundation Beneficiary
A Panama foundation has beneficiaries. No one owns the foundation. It is a legal entity that functions for the benefit of its beneficiaries at the direction of its protector. Beneficiaries may be anyone or any entity, including the protector. For example, you can have yourself appointed protector and appoint yourself beneficiary with the stipulation that upon your death your children become the beneficiaries.
Panama Foundation Registered Agent
The law requires that each foundation has a registered agent. This is has to be a law firm or single attorney in Panama.
Use a Panama private interest foundation if your goal is privacy and asset protection. Use a foundation in Panama along with an offshore corporation in Belize or Panama as an alternative to a trust or will. Think about what you want to do in regard to protecting your hard-earned wealth. Then consult an expert to see how a Panama Private Interest Foundation can help you accomplish what you need to do. Start with someone whom you can trust and, ideally, someone who speaks your language.