If you’re reading this, you likely have or are considering some offshore business investment in Panama. In recent years, business owners of both large multi-national corporations and those looking for a stable, business place to launch their start-up, have flocked to Panama.
It is always wise to invest in one’s future. For some savvy international business owners, this means building up your inheritance.
Whether you own a business in Panama or are a major stock holder in one, there is an inheritance vehicle that is available in Panama that has gained in popularity due to its estate planning benefits.
It is called a Panama Private Interest Foundation.
Though you’ve likely heard of it, it can be hard to understand.
What is a Panama Offshore Foundation?
In simple terms, a Panama Offshore Foundation is a combination of a trust and an offshore corporation or international business company (IBC). It is used to hold assets such as bank accounts, stocks, shares and real estate.
Foundations don’t have owners, but beneficiaries (you and your heirs).
It is based on the Liechtenstein Foundation which has become the most popular wealth management vehicle for Europeans.
If you’ve been studying the offshore and asset protection arena for a little while, you may have heard positive things about the strong privacy benefits of the Panamanian Private Interest Foundation. As an asset protection vehicle, it’s second to none.
Benefits of a Panamanian Foundation
Panamanian Foundations are popular largely in part because of their many benefits. The largest benefits Panamanian Foundations offer beneficiaries include:
- Reduce tax liabilities
- Protection from lawsuits and claims
- Passes along to chosen beneficiaries without unnecessary legal disputes and fees associated with inheritance taxes, deductions, and probate
- Provides more privacy to administer your family assets
- Can be set up to benefit a person or persons, family or a specific social purpose
- Their assets are non-sequestrable and non-embargable, meaning they can’t be seized or have liens out on them
- Funds can be easily transferred offshore or received from offshore
- They don’t engage in profit-making commercial activities as a corporation can, though they can do commercial activities whose profits contribute to the activities of the foundation
Uses of a Panamanian Foundation
Panamanian Foundations offer alternative funding sources for those doing business abroad. They are primarily used for protecting the owner’s assets.
Here are the most common uses for a Panamanian Foundation:
Business owners better protect their company’s shares by making the Panamanian Foundation the shareholder instead. The share get transferred from an individual’s name to that of the Foundation. As the Foundation itself doesn’t have any owners, the shares it has will directly benefit its beneficiaries.
Lawsuit Protection. Putting one’s assets into a Panamanian Foundation strips the individual of all ownership. The individual’s assets, therefore are no longer his. When a lawsuit, especially a civil lawsuit, comes, the individual will own nothing, therefore being protected from relinquishing any assets.
Perpetual Estate Planning. When people think of passing one’s assets onto heirs they think of wills and testaments. These, however, lead to a lengthy and costly process through probate court which involves lawyers, court costs, appraisers and estate taxes.
With a Panamanian Foundation, the assets are owned by the Foundation, not the individual. Therefore, there will be no assets to devalue during the probate process. One’s heirs will be declared the beneficiaries if the owner declares it. No disputed court proceedings, no court costs and no taxes paid on the assets.