Panama Foundations

Panama is the most southerly Central American country and is bordered by both Colombia and Costa Rica. Panama’s strategic location has influenced the development of its offshore, tourism and manufacturing industries, making Panama one of the most developed countries in this hemisphere.

A Panama Foundation is a hybrid entity that combines the elements of a trust and an offshore Panama corporation. Panama Foundations are an ideal mechanism for protecting one’s assets protection and serves as a means for accumulating funds for retirement, college tuition for one’s children or close friends and charitable causes such as scholarships, grants and outreach programmes for the elderly, homeless and underprivileged. Panama Foundations can also be set up to secure the future of minors in the event of a parent’s death or a disaster, as well as ensuring the maintenance of property. A Panama Foundation is a valuable tool for insuring the future.

There are several other advantages to owning a Panama Foundation. The assets owned by the Panamanian Foundation are the sole property of the Foundation as a result cannot be claimed by anyone. This provides for asset protection in the event of litigation and bitter divorces. Persons living in countries where the policy of Controlled Foreign Corporation is enforced can place their shares in the name of their Panama Foundation as a means of identity protection and privacy in conducting business. Panama Foundations are also effective in estate planning since they permit persons to purchase real estate that can be placed in the Foundation while the property increases in value in a tax free environment. Property held in a Panamanian Foundation is exempt from transfer and inheritance taxes, so long as the property involved does not exist within Panama. The tax exemption granted to property held by a Panama Foundation which makes the transfer of property to children and loved ones a very simple process. Additionally, the funds placed in a Panama Foundation should not be derived from within Panama.

Panama Foundations comprise of the Founder, which is similar to the Settlor of a Trust, the Foundation Council, Beneficiaries and the Guardian or Protector. Panama Foundations are required to have a council with a minimum of three members, the names and addresses of whom will appear in public record. The members of the council may be natural persons or a corporation with three directors that are natural persons.

One or more persons or a corporation can form a Panama Foundation. The Panamanian Foundation is governed by the Foundation Charter. The Foundation Charter is similar to the Memorandum and Articles of a regular company and contains the purpose and objectives, initial capital, duration and name of the Panama Foundation, name and address of the Panama Foundation’s registered agent, the procedure for appointing the Foundation’s beneficiaries and the names and addresses of the members of the Foundation’s Council. The Charter of a Panamanian Foundation is complemented by the By-laws, which does not have to be filed at the Panama Companies Registry. The by-laws states the names of the beneficiaries, the way in which the Foundation should be administered and allocation of assets held in the Foundation per beneficiary. The name of the Panama Foundation may be in any language and must include the word “Foundation”.