The Private Interest Foundation is an innovative legal concept that is revolutionizing the asset management world, inheritances, and wills. This useful entity was created by Panamanian lawyers in 1995, in response to a worldwide need for an easy management entity, with a simple registration process and more flexibility than similar systems used worldwide for the administration of patrimony and asset protection. The Panamanian Private Interest Foundation has successfully competed with countries with "Common Law Trust" traditions, and with "Familien Stiftungen" in Germanic countries with a civil law tradition
A person (natural or legal) known as Founder, "creates" a legal entity, to transfer assets (real estate, shares, accounts, etc.) into it, so that in turn, this legal entity manages with "council" those assets, in favor of certain beneficiaries, who have been appointed in a private document known as "bylaws". All this structure is established in a public document known as the "Foundation Charter" jointly with a private one known as "Regulations or By-Laws". Additionally, the person who establishes the private foundation (founder) can be simultaneously: member of the council and beneficiary, granting the possibility of different types of asset protection or inheritance structures with a Private Interest Foundation.
Additionally, a "protector" (professional, trustee, lawyer, or similar) can be appointed to execute the by-laws for the Beneficiaries. Upon the proper formation, the client could initiate the process to transfer assets or the bank account opening on behalf of his/her Panama private foundation.
Panama Foundation vs Trust
- In a trust, the assets are transferred into the name of the trustee directly. Being the Panama foundation a legal person, the assets are transferred into the name of the foundation itself.
- In a trust, the trustee is usually one or several “professionals”, but in a foundation, the “trustee” is the “foundation Council” that could be a professional, a legal entity, or 3 natural persons
- In the common law world, a trust is considered an “agreement”, instead a Panama foundation is a “legal person” itself
- A trust law does not protect against future claims against the settlor from creditors. The Private Interest Foundation law has very clear provisions limiting claims against the founder.
- A trust and a foundation are both regularly used to buy real estate, manage bank accounts, investment accounts, stocks, and mutual funds management, and a testamentary system to distribute family wealth.
- You could achieve asset protection, privacy, and a testamentary plan
- No payment of taxes within the Republic of Panama
- As a Worldwide tax minimization tool
- It has a flexible formation that allows you to achieve private control of your assets
- Non-annual tax return on foreign income
- Non-taxes on local Banks profits
- No paid-up or start-up capital is required.
- Non-perpetuities rules or minimal capital
- Members may be individuals or corporations of any nationality.
- Once the due diligence forms complete the formation can be done in approx. 1 week.
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