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Panama Private Interest Foundations For Asset Protection

May 6, 2008
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 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 - the person who forms the foundation and pays in the initial capital; - Council - like a company board of directors, council members are recorded in the public registry; Protector - appointed by council at the creation of the Foundation; Beneficiary - appointed by the Protector and can remain anonymous.

The real strength of the Private interest foundation is provided to the protector and beneficiaries by the protector. For example, you may want to use your Panama foundation as an asset protection buffer against unfavorable inheritance laws in your country. Panama's foundation laws protect the rights of the protector upon their death by not charging an inheritance tax on the foundations assets.

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.

Unlike a Panama Corporation, the PPIF is expressly prohibited from engaging in commercial business activity. However, they may carry out commercial activities such as owning corporations that are actively engaged in commercial business activities, provided the profits of those activities are used for the purposes for which the foundation exists. As with all Panamanian entities, tax is not levied on income derived outside Panama.

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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