One of the main objectives of the Private Interest Foundations is to provide a legal vehicle that will allow you to protect, to ease the administration of and to avoid hereditary proceedings of your personal estate.
The Private Interest Foundations combine the advantages of corporations and trusts into one legal structure with its own characteristics. Through a Private Interest Foundation you may segregate all or part of your patrimony in a confidential, secure and simple form. Private Interest Foundations work with two kinds of documents: one, the Foundation Charter which is public and serves to create the legal entity and the other is the Regulations which is private and confidential and details the benefits, the conveyed assets and how to distribute these assets among the beneficiaries. Like in a trust, you will transfer the property title, administration and disposition powers over the assets, not to a third party, but to the Foundation itself. The Private Interest Foundations act through a foundation council which is bound to follow the instructions given by the founder in the Foundation Charter and its Regulations and always for the benefit of the beneficiaries previously determined therein. The foundation council works like the board of directors of a company, however, as opposed to a national or international corporation, the Private Interest Foundation cannot engage, on a regular basis, in commercial activities.
Advantages and uses of Panama Private Interest Foundations
- It is a nonprofit organization which may, however, engage in commercial activities in a non-regular manner, or exercise rights arising from its interest in mercantile corporations which are part of foundation assets, all the economic benefits being devoted exclusively for the purposes of the Foundation.
- It can be constituted to function throughout the founder’s life; or after his/her death, as may be determined by the Founder in the Foundation Charter.
- Panamanian foundations are not subject to tax by reason of income earned from foreign sources.
- The assets may not be affected by the personal liabilities of the Founder or of the beneficiaries.
- The Foundation Council may be composed by a minimum of three natural persons, which may include the founder or a juridical person or a combination of the above mentioned.
- After the demise of the Founder, the foundation council shall proceed to transfer the assets and/or proceeds to the appointed beneficiaries, without the need of any judicial, administrative or other kind of proceeding and according to the instructions given by the Founder, by means of the Regulations.
- A Panamanian Foundation may migrate from or to other jurisdictions which accept it.