Panama Foundation

Panama Foundation - The Panama Foundation has been modeled after the Lichtenstein Foundation which has always been one of the world’s best asset protection vehicles. In Panama the Foundation is formally referred to as the Panama Private Interest Foundation. In Lichtenstein the Foundation is referred to as the Lichtenstein Family Foundation. The Panama Foundation is like a combination of an anonymous corporation, a trust and a will but it is not like any one of these individually. It is a dynamic and fluid asset protection vehicle.
Panama Foundation versus Lichtenstein Foundation – There are some serious differences between the two foundations which we will point out. The Panama Foundation only requires $10,000 of capital while the Lichtenstein Foundation requires 30,000 Swiss Francs. Lichtenstein Foundations have a greater bookkeeping responsibility than the Panama Foundation. In the Panama Foundation the beneficiaries or heirs can not attack the inheritance schedule. What you write is what they get. In the Lichtenstein Foundation the heirs or beneficiaries can attack the inheritance pursuant to: Article 560 of the Lichtenstein Law. The Panama Foundation has a fixed annual fee of $300.00 paid to the government. The Lichtenstein Foundation has a variable fee which is based on amount of capital being managed in the Lichtenstein Foundation and this figure is generally one percent. Ouch! In the Panama Foundation the founding parties supervise the Foundation themselves through the office of the Foundation Protector and/or through the Council Members which can be nominees. In the Lichtenstein Foundation the role of the supervisory body is undertaken by the government pursuant to Article 564 of the Lichtenstein Act and this is of course privacy invasive. The Lichtenstein Foundation has the ability to convert into an Anstalt or Trust Company. There is no such provision for the Panama Foundation and in our opinion no such a need due to the favorable legislation in Panama.

Panama Foundation Not Profit Oriented – The Panama Foundation is not supposed to be engaged directly in commercial for profit activities although it can hold the shares of a Corporation in any jurisdiction that is directly engaged in commercial activities anywhere in the world. This is mostly to prevent people with income derived from within Panama from activities taking place in Panama from using the Panama Foundation to avoid Panama taxes for onshore derived income.

Panama Foundation and Death of Founder – The founder can create a Panama Foundation to come into effect at the time of his or her death or at the time of the creation of the Foundation. The deceased activation could be by private document which would need to be notarized in Panama. The formal procedure necessary for the execution of a will would not be applicable under these circumstances. The founder would still retain the rights to revoke such a document before their death.

Panama Foundation is a Judicial Person- This is similar to a corporation. The assets of the Panama Foundation shall constitute an estate separate from the estates of the founder, the protector and beneficiaries for all legal purposes and in no event shall the assets of the Panama Foundation be used to satisfy any debts of obligations of the founder, protector or beneficiaries (and of course the nominee council members). There is a fraudulent conveyance provision of three years. If one were to convey assets to a Panama Foundation to avoid attachment by a creditor, that creditor could contest the transfer of the assets to the Panama Foundation for a period of three years from the time of the transfer. There is nothing illegal about a fraudulent conveyance under Panama Law; it is merely a remedy available to a creditor who wishes to attempt such a recovery which requires a full court case. In the event a creditor would prevail the entire Panama Foundation would not be set aside and all of the assets would not be exposed, just the amount the creditor could prove to the Panama Court was transferred to the Panama Foundation to remove the assets from the reach of the creditor. This is not an easy thing to prove and is heavily based on intent. Such a case would be expensive, time consuming and not that easy to win. Panama Foundations have special protections from pre-trial freezes or embargoes (sequestering) of assets. The hardest entity to go after in Panama in the Panama Foundation.

Panama Foundations are Anonymous – Only the nominee foundation council members appear in the public registry. Our law firm does not list you as the founder for privacy. The protector and the beneficiaries are not publicly available. The letter of wishes or instructions as to how the Panama Foundation assets are to be handled is also a secret document. You normally receive signed but not dated letters of resignation from the nominee council members.

Panama Foundation Tax Free – Under Panama Law the Panama Foundation is tax free as long as all the income is derived from offshore, not from within Panama. Panama has no inheritance taxes at all. In Panama there is no capital gains tax on bank interest. In Panama there is not tax on gains from the sales of securities unless they are from a Panama Corporation.

Panama Foundation has no Owner - A Panama Foundation by definition has no owners. There are no shares or stock certificates. There is a founder (not you we supply that), beneficiaries which may or may not be you which are secret in any event, and a Foundation protector which may be you, or a corporation and the Foundation is Protector is also a secret. The Foundation Council members appear in the public registry and nominees are used to preserve anonymity. The protector which is an optional position can control the entire Foundation. You do not own a Panama Foundation, no one does. What if you used a Corporation as a foundation protector and other corporations and foundations as beneficiaries, how would you be associated or connected directly to the foundation? Remember the ownership records on these corporations are not publicly available. What if the Panama Foundation owned a Corporation and that Corporation hired you to work for it and sign on its bank account since part of your duties specified in your written contract with the corporation which was signed and notarized by the nominee directors was to execute the bank account.

Panama Foundation Uses – A Panama Foundation can own corporations anywhere, it can own real estate, boats, airplanes, art work, gold, rare stamps and coins, jewelry, patents, royalty rights, autos, collectables, stocks, bonds, options and other things of value.