FOUNDATIONS AND TRUSTS
Panama's Most Powerful Tools for Asset Protection and Estate Planning.
The Panama Private Interest Foundation and the Panama Trust are two of the strongest asset protection and wealth structuring vehicles available anywhere in the world. For high-net-worth individuals and families, they are not optional extras. They are essential architecture.
Private Interest Foundation
What It Is
A Panama Private Interest Foundation is a civil-law legal entity used for asset protection, estate planning, and wealth structuring. Transferring assets to a Panama foundation shields them from claims while providing full confidentiality of beneficiaries and distribution rules. Combined with no foreign income tax and the absence of inheritance tax, the Panama PIF is a common choice for wealth preservation.
Governed by Law 25 of 1995, the Panama Private Interest Foundation is a unique legal structure that combines the best elements of a corporation and a trust into a single, independently owned entity. It has no owners or shareholders. Assets placed inside the foundation legally belong to the foundation itself, creating a definitive separation between the founder's personal estate and the protected assets.
How It Works?
The foundation is established by a Founder through a Foundation Charter registered with Panama's Public Registry. A private set of regulations, which is never filed publicly, governs the distribution of assets and the beneficiaries. A Foundation Council manages the assets according to these rules. An optional but highly recommended Protector oversees the Council and ensures the founder's wishes are carried out precisely.
The Foundation Council can be empowered to oversee a family business, manage a global investment portfolio, or hold and protect valuable intellectual property. The foundation can hold any type of asset located anywhere in the world.
The Panama Trust
What It Is
A Panama Trust is a legal arrangement governed by Panama's Trust Law where an individual or entity, known as the settlor, transfers the management of assets to a trustee for the benefit of designated beneficiaries. Unlike a foundation, a trust does not require registration in the Public Registry, providing an additional layer of confidentiality.
Common Uses
Protecting assets from future creditor claims or divorce proceedings. Generational wealth transfer on the founder's terms. Holding international real estate, investment portfolios, and corporate shares. Ensuring specific conditions are met before assets are distributed to beneficiaries. Philanthropy and charitable giving structures. Confidential ownership of Panama real estate used as a residency qualifying investment.
Protecting assets from future creditor claims or divorce proceedings. Generational wealth transfer on the founder's terms. Holding international real estate, investment portfolios, and corporate shares. Ensuring specific conditions are met before assets are distributed to beneficiaries. Philanthropy and charitable giving structures. Confidential ownership of Panama real estate used as a residency qualifying investment.
Key Benefits
-
Because the foundation has no owners, the assets of the foundation cannot be claimed if the founder, council members, protector, or beneficiaries have unpaid debt. According to Panama law, the assets of a foundation are non-freezable if the money has been in the foundation for more than three years.
-
Beneficiary identities are recorded only in private regulations, never in public documents. Nominee founders and council members are commonly used to maintain complete confidentiality of the beneficial structure.
-
Panama levies no income tax on foreign income and has no inheritance taxes on foundation assets.
-
Foundations can exist indefinitely, transcending the founder's life to benefit multiple generations.
-
Panama private interest foundations only need to start with a minimum of USD 10,000, called a patrimony. This sum can be increased at any time if necessary.
-
All foundations have to pay a minimal USD 400 annual fee called the annual franchise tax.
Both instruments are excellent for estate planning, but their objectives, legal nature, and modes of operation differ significantly. In a trust, assets remain under the control of the trustee as a fiduciary entity, whereas in a private interest foundation, assets become the property of the foundation as an independent legal entity. Trusts offer greater confidentiality as they are typically not publicly registered, whereas foundations have certain elements that appear in public records.
The choice between the two depends on your specific objectives. For maximum privacy in a non-registered structure, the trust is preferred. For the strongest legal asset protection with independent legal personality, the foundation is the superior vehicle. Both can be used together as complementary layers within a single wealth structure.
Advisory No.9° works with Panama's most experienced trust and foundation attorneys to recommend and build the right structure for each client's profile, assets, and long-term objectives.
Choosing the Right Structure
Advisory No.9 acts as a coordination servicae and is not authorised to practise law or provide legal, tax, or financial advice. The contents of this website are for informational purposes only and do not constitute advice of any kind.