The Panama foundation, also known as a private interest foundation, is a type of entity that is a cross-breed between a trust and a corporation, however, it is neither. A Panama private interest foundation is an entity that is different from any other legal entity known in Anglo-saxon law because it is not the legal personification of a person or group of persons (as with a corporation), rather it is a legal entity that does not have owners (share-holders, participants, or partners), and it traditionally has a specific purpose for the benefit of a general group of individuals, generally for families.
IMPORTANT NOTICE TO US PERSONS: US Persons (residents or citizens of the United States) are required to report all interest in any foreign corporation, trust, or private interest foundation to the US tax authorities. International Relocation Firm does not offer Panama Private Interest Foundations to US Persons.
Private Interest Foundation History
The concept of a “Foundation” began during the Roman Empire, under the influence of Christianity. As an example, the Catholic Church was considered a divine foundation, and the various sub-organizations within the church had the legal control for administering its’ patrimony. The original foundations were not created for serving a private need for a specific individual or family, rather they were formed for serving the needs of a community. Several centuries later, the legal entity denominated as a “Foundation” continues to exist and is widely used and accepted around the globe for personal and private needs.
The concept of a “Private Interest Foundation” began when the Principality of Liechtenstein created the “Law of Persons & Companies”, the 20th of January, 1926 (Personen und Gesellschaft Recht – P.G.R.), which created the “Family Foundation”, (for the private benefit of the members of one or more families) and the “Mixed Foundation” (for the private benefit of not only families, but also for other persons or institutions).
Historically, wealthy families in Europe have established Family Foundations incorporated in the Principality of Liechtenstein (a Neutral jurisdiction for purposes of wars, etc.) for the purpose of estate-planning necessities, to ensure the safe transition of assets to the family’s beneficiaries. Today, Liechtenstein Foundations can cost upwards of US$25,000 to incorporate, and up to US$10,000 per year to maintain.
Panama Private Interest Foundation Estate Planning
The Panama Private Interest Foundation is a legal entity that was developed based on the Private Interest Foundation models from three different jurisdictions including the Principality of Liechtenstein, Switzerland, and Luxembourg. The Panamanian Government carefully designed the Panama Private Interest Foundation with the intentions of creating a more modern, more flexible, and more affordable estate planning vehicle for people from around the globe. The assets of the Private Interest Foundation take on a separate legal identity from the personal assets of the Founder, Protector, Council, or Beneficiaries.
Panama foundations offer clear advantages for international estate planning, providing organization, holding and protection of family patrimony to the Protectors, Founders, and Beneficiaries of the Panama Foundation. The Panama Foundation is a solution to a global need for an affordable, flexible, and protective estate planning vehicle that can be used to hold Panama assets such as corporations, trusts, bank accounts, investment accounts, real estate, or any other type of asset around the world.
A Panama Private Interest Foundation comes into existence upon its registration in the Public Registry. No approval from any public authority is required. Law No. 25 of June 12, 1995 regulates Panama Private Interest Foundations.
Typically, Private Interest Foundations in Panama are used by wealthy Panamanian families for estate planning and inheritance purposes, for structuring and protecting their family patrimony, so that the family assets will be handed down to the heirs with specific instructions provided by the Founder.
A foundation in Panama can also be used for estate planning where the founder transfers title to current assets and has the Foundation acquire Panama real estate, Panama assets, and open a Panama bank account intro and/or Panama investment accounts.
A Panama Private Interest Foundation can provide international estate planning by serving as a holding entity, for example, owning the shares of a Panama Corporation.
Contact us for a free consultation on how a Panama Private Interest Foundation can serve you in your estate planning needs.