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Foundations in Panama: Asset Protection Offshore

By: Reginald R. Nicholsonian


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Moving your assets offshore does not mean that you are a criminal. There are a multitude of good reasons to make the move to offshore asset protection such as; your government is not stable or democratic, your local banking system is untrustworthy or does not offer any insurance for your assets held there or you want to increase your financial privacy and make it harder to bring baseless lawsuits against you. Panama offers one of the world's best asset protection structures which is known as the Panama Foundation or "private interest foundation".

The Panama Foundation was created by the legislative arm of Panama's government in 1995 and can be thought of as a form of marriage between trusts and wills with the protective benefits associated with Panama offshore companies. The statutes that underpin this asset protection structure were inspired by the "Stiftung" model that was first introduced in Liechtenstein. In general, a Panama Foundation has:

- 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.

In order to ensure that a Panama foundation is set up properly you will need to create letters of instruction in the event of the protector's death. These letters of instruction spell out what should happen to the assets of the foundation and who the beneficiary should be. There is no requirement to publish who the beneficiary of a foundation is and these instructions can be kept safely private until such time as they are required.

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.

As long as a Panama foundation is not engaging in illegal activity it is impossible for the assets of a foundation to be sequestered or frozen.

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

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



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