Panama Private Foundations - Main Concepts



One of the main elements of using a Panama foundation is protecting assets against legal liens. Besides, a foundation can create a private inheritance system for your beneficiaries, with no need for courts or lawyers to transfer patrimony and can be structured as confidential as you deem necessary. In this sense, a Panamanian foundation provides a triple benefit simultaneously: 1) An asset protection plan, 2) A private testamentary estate plan, and 3) Confidentiality.


In simple terms, a private foundation is like your "own trust," but the difference is that you do not need to hire a trustee's services to manage your estate or money on your behalf or pay their fees to invest it. You control the foundation on your own 100%.


To fully understand this unique tool, you need to be clear on who its members are, what assets can be transferred, and what documents make it up?


The Founder: The Founder is like the settlor for trust in the foundation. The client can be the Founder or maintain his/her total privacy by appointing a nominal entity in this position. It could be one natural o several natural persons or one legal entity.

The Council: It is a sort of "board of directors" of the foundation and usually needs three natural persons: a president, a secretary, and a treasurer. But the law allows appointing a single legal person as a council. A unique feature of the council appointment is that the Founder can simultaneously be both a board member and a founder.

Beneficiaries: The beneficiaries are those who receive the distribution of the assets of the foundation. Among the beneficiaries may also be the Founder, according to Panamanian law.


The Protector: This member is like an executor in a will and would then be the person in charge of executing the foundation's instructions established in the Founder's foundation regulations (By-Laws).


Assets: A Panama foundation could own Real Estate, Bank Accounts, Shares, Bonds, and any other assets worldwide, with some restrictions depending on the jurisdiction. It is advisable not to transfer under its name assets that may cause damage to third parties, such as automobiles, aircraft, or ships, taking into account that one of the main benefits of a Panama Foundation is that the property under its name is "unseizable," unless such property causes "damage to third parties," according to law.


Documents: It is essential to understand that a Panama foundation is created with both public and private documents, which allow it to keep some aspects of its formation confidential. The foundation can also make public its private documents in case it is convenient for distribution to the beneficiaries. Here the primary documents in Panama Foundations:


Foundation Charter: This document contains all the general information of the foundation, such as the name of the foundation, the name of the Founder, its general purpose, the terms of the board members, the powers of each of the members. This document is a public deed filed at the Panama Registry.


Foundation By-Laws: In this document, all the foundation beneficiaries are named with their percentage and conditions to distribute the foundation's assets in their favor. It is a private document, but the signature of the grantor is notarized.


Appointment of Protector: It is the document where the executor of the foundation is appointed. It is also a private document but notarized for legality purposes.

According to the Founder's personal and financial needs and each beneficiary's interests, each foundation must be tailor-made. Contact us for complete advice on the creation of a private interest foundation in Panama.



Heriberto Estribi

Founding Partner of PGS Attorneys and PGS Realty


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