A Panama private interest foundation can protect your assets in several ways. A Panama foundation is a unique legal entity dating back to when wealthy European families created them as an inheritance tool in Medieval times. Liechtenstein, Luxembourg, and Switzerland enacted laws creating private foundations for personal usage. Panama used parts of these three country’s laws to create a unique Panama Private Interest Foundation law back in 1995.
Panama Private Interest Foundations are different from corporations because they don’t have corporate stock certificates (shares) nor officers or a board of directors and don’t engage in active businesses. A Private Foundation is a legal entity without owners such as partners, shareholders, or participants; traditionally its purpose is to benefit a specific group of individuals.
1. Lawsuit Protection
A Panama foundation can strip you of all ownership of assets. By not owning assets such as vehicles, real properties, jewelry, art objects, antiques, airplanes, boats, securities, and even bank accounts, you can become “Judgment Proof”. When you own nothing, you will not be a victim of civil lawsuits which are out of control in the U.S. and other countries. Civil lawsuits are a menace to society because juries often award too much to the plaintiffs. A good example is the famous $2 Million USD judgment against a McDonald’s franchise because a customer in their drive through window spilt hot coffee on his lap while being seated in a car. There are many more huge judgments arising from civil lawsuits which have bankrupted the defendants. Putting ownership of all assets into the name of a private foundation is one way to protect your assets from frivolous lawsuits.
2. Perpetual Estate Planning
A Panamanian Private Interest Foundation can provide a low cost, fast process for passing on your assets to your heirs who will then pass on the assets to their heirs and so on. Simply leaving your family a will and testament is not a very good way to protect your heirs when you pass away. That is because a will usually must be put through a civil court probate proceeding. Probate is something your family should avoid because it is time consuming and expensive with all of the lawyers, appraisers, court costs, and then payment of estate taxes. It even gets worst if some distant relative decides to challenge the will in probate court. If all of your assets are owned by a private foundation you will have no assets to probate. The foundation will continue to exist while your heirs (known as the beneficiaries) can quickly assume control of the foundation.
3. Avoiding Estate Taxes
Another way in which Panama Private Interest Foundations protect your assets is by legally avoiding the payment of the estate tax. Many countries have a tax which is levied against the value of the assets which have been through probate. If there is no need to probate because no assets were left by the deceased there will be no estate tax. The assets held by the private foundation will not be subject to an estate tax because the foundation will never go through a probate.
As you have just read, there are three ways how a Panama Private Interest Foundation can protect your assets. Read more about Panama foundation or contact us to set up your own Panama Private Interest Foundation.