Foundations in Panama: Asset Protection Offshore
There are a multitude of reasons you could consider moving your assets to an offshore tax haven that are perfectly legal and legitimate. Some examples include; increased financial privacy and protection from frivolous litigation at home, fears over your local banking system or local government instability to name a few. Panama is unique in the world as it offers many methods for protecting your wealth through layered strategies that include the Panama private interest foundation or PPIF which is a nearly bullet proof asset protection vehicle when used properly.
The Panama Foundation was created by the legislative arm of Panama’s government in 1995 and can be thought of as a form of marriage between trusts and wills with the protective benefits associated with Panama offshore companies. The statutes that underpin this asset protection structure were inspired by the “Stiftung” model that was first introduced in Liechtenstein. In general, a Panama Foundation has:
– the Founder, which is the person who creates the foundation and provides the initial funding (must be at least $10,000); – Council, can be thought of as a board of directors which are recorded in the public registry; Protector, which is appointed by council at the creation of the Foundation; Beneficiary, must be appointed by the Protector and can remain anonymous.
The real strength of the Private interest foundation is provided to the protector and beneficiaries by the protector. For example, you may want to use your Panama foundation as an asset protection buffer against unfavorable inheritance laws in your country. Panama’s foundation laws protect the rights of the protector upon their death by not charging an inheritance tax on the foundations assets.
In order to ensure that a Panama foundation is set up properly you will need to create letters of instruction in the event of the protector’s death. These letters of instruction spell out what should happen to the assets of the foundation and who the beneficiary should be. There is no requirement to publish who the beneficiary of a foundation is and these instructions can be kept safely private until such time as they are required.
Unlike a Panama Corporation, the PPIF is expressly prohibited from engaging in commercial business activity. However, they may carry out commercial activities such as owning corporations that are actively engaged in commercial business activities, provided the profits of those activities are used for the purposes for which the foundation exists. As with all Panamanian entities, tax is not levied on income derived outside Panama.
Panama law guarantees the assets of a PPIF against sequestration and embargo provided the Foundation does not engage in illegal activity. This prevents assets being frozen as a protective measure prior to a court trial.
The Panama private interest foundation can provide wonderful offshore asset protection provided you set up the foundation properly. This author highly suggest using a knowledgeable law firm in Panama.
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