Panama Private Interest Foundations For Asset Protection | Personal Finance

By ReginaldR.Nicholsonian
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Protection from rampant litigation, circumventing forced heirship, a hunger for renewed personal privacy, fears with respect to the integrity of your native country's banking system are just a few of the reasons you might wish to take your personal assets offshore. Panama offers numerous methods for personal asset protection and estate planning with the Panama Private Interest Foundation (henceforth PPIF) being particularly suited to those seeking a high degree of anonymity and asset protection.

The PPIF was introduced by the Panamanian legislative branch/assembly in 1995 and, broadly, marries the the notions behind trusts and wills with the protective benefits Panamanian corporations. Its underlying statutes are based on the "Stiftung" model used in Liechtenstein. Typically, the Foundation comprises the following parties:

- 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.

Panama foundations provide a number of benefits not the least of which is much more favorable inheritance laws upon the death of the protector. If you are the protector of a foundation and you pass away there is no inheritance tax to pay for the Foundations assets when they are transferred through your secret beneficiary wishes letter (can be thought of as a will). You can also protect yourself from litigation since a foundation cannot be owned by a person and as such the assets cannot be frozen unless it can be shown to a Panama court that the foundation is being used for illegal purposes such as drug trafficking or money laundering.

Intrinsic to the working of the foundation are the Letters of Instruction. These enable the Protector to specify exactly what should happen to the Foundation's asset should something (such as death or incapacitation) happen to the Foundation Protector. It is possible to use the Letters of Instruction to specify the appointment of a new Protector on death and thus keep the Foundation in perpetuity (keeping the PPIF in perpetuity can provide an additional safeguard against forced heirship disputes since Panama will not give credence to the forced heirship laws of other countries). Without a mandatory filing requirement, the Letters may be maintained privately to ensure the privacy of the Protector and Beneficiaries.

Panama foundations are strictly forbidden from engaging in for profit business activities but a foundation is allowed to own corporations, real estate and bank accounts.

The only way that the assets of a Panama foundation can be sequestered is to show a Panama court that the Foundation is engaged in illegal activities. If the court accepts this evidence the foundation's assets may be sequestered and then frozen until a trial verdict is reached on the charges.

The Panama Foundation offers a very sophisticated, anonymous and almost bullet proof asset protection capability.

About the Author

To gain a more detailed understanding of panama private interest foundations or asset protection in Panama please visit the author's OffshoreLegal.org website.

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