Private Interest Foundations Offer Beneficial Structures for Trusts

Panama City, Panama — October 24, 2012 — Panama Private Interest Foundations have existed for decades, but they have attracted increased attention from financial planners recently due to sluggish world economies, real estate market collapses, and high unemployment rates, making asset protection more desirable for wealthy and middle-class people. Panama allows Founders to endow these legal entities to accomplish specific purposes or objects, such as charity funding, trusts for spouses or children, or to fund medical care.

Foundations can own bank accounts, stocks, bonds, real estate, and corporations. These legal entities cannot conduct business directly, but they have authority to own and direct companies that do. The Panama Law of 1995 protects the confidentiality of these financial arrangements, and severe penalties apply to breaches of duty or failures to keep information confidential.

Asset Protection Helps Ensure Financial Security and Family Legacies

The Panama PIF Law places few limits on the structuring of trusts and minimal regulations regarding founders' intentions for establishing them. Owners or founders often designate themselves as beneficiaries during their lifetimes and name successive beneficiaries after their deaths. Panamanian Foundations offer fiduciary structures for transferring and disposing of assets to beneficiaries in orderly ways that enjoy the strongest legal protections.

Inheritance laws from the Founder's domicile cannot attach the Foundation's assets or restrict the objectives in any way. Founders can keep their books entirely private, and they need not keep them in Panama. The benefits of establishing Foundations include the following advantages.

• A Panama Foundation enjoys freedom from attachments due to foreign litigation and judgments.
• Panama PIFs only get taxed on income produced in Panama, and all foreign income remains exempt from taxation.
• Legal processes cannot freeze, embargo or sequester Foundation assets.
• Foundations may transact business in any world currency.
• These versatile trusts can include assets such as bank deposits, Forex trading, stock market investments, ETF shares, and corporation shares, the only caveat being that income must benefit the Foundation's stated purpose.
• All assets within the Foundation receive protection from bankruptcies, seizures, insolvencies and other legal claims.
• Founders can transfer other trusts to Panama to create PIFs.

Setting Up a Panama PIF

The Panama government passed the Private Interest Foundation Law Number 25 in June of 1995, and the statutory regulations grant Foundations legal autonomy, so PIFs have no legal owners, and the assets cannot be tied to any person's financial assets.

The Foundation Charter describes its purpose and designates beneficiaries. The governing body consists of the Foundation Council, which must number at least three people. Charters must include the following information:

• Name and domicile of a Resident Agent in Panama.
• Name and addresses of Foundation Council members.
• Foundation name and Founder name.
• Purposes or goals of the Foundation.
• Name of beneficiaries.
• Instructions on how to modify the Foundation Charter.
• Definition of Foundation duration.
• Any restrictive clauses or caveats the Founder deems appropriate.

Initial Costs and Recurring Fees

Panama PIFs only pay taxes applicable to Panamanian business interests, registration fees based on initial capital investments, and annual franchise taxes of $400 USD. Minimum initial asset values must equal or exceed $10,000 USD. The following fees might also apply:

1. Legal fees for setting up Foundation Charters and transferring assets.
2. Translation fees.
3. Fees for drawing up regulations and official documents.
4. Power-of-attorney registration fees if included in the Charter.
5. The resident agent fee for the first year.
6. Courier and office expenses.

A Panama Foundation offers legal protection for assets to provide for children, spouses, charities, educational funds, and medical-support objectives. The PIF Law stipulates that all controversies be resolved through arbitration instead of litigation, and arbitration may take place in any country and follow any procedure defined by the Founder or other authorized representative. Founders may appoint auditors, supervisory entities, and protectors to make sure Foundations continue to follow their instructions. The tremendous advantages of this versatile legal structure combine the benefits of wills, trusts, and business profit-making abilities to protect assets from financial perils and secure funds for many types of personal financial strategies.