One of the main objectives of the Private Interest Foundation is to provide a legal vehicle that will allow you to facilitate the administration of assets and avoid inheritance proceedings of your estate.
Private Interest Foundations combine the advantages of corporations and trusts into a single legal structure with its own characteristics. Through a Private Interest Foundation, you can segregate all or part of your patrimony in a confidential, safe and straightforward way. Private Interest Foundations work with two types of documents: one, the Foundation Charter, which is public and serves to create the legal entity, and the other, is the Bylaws, which is private and confidential and details the benefits, assets, and their distribution among the beneficiaries. As in trusts, you will transfer the property title, administration, and disposition powers over the assets, not to a third party, but to the Foundation.
Private Interest Foundations act through a foundation council, which is bound to follow the instructions specified by the founder in the Foundation Charter and its Regulations and always for the benefit of the beneficiaries previously determined therein. The foundation council acts as the board of directors of a company; however, as opposed to a national or international corporation, Private Interest Foundations cannot engage in commercial activities on a regular basis.
Advantages and uses of Panama Private Interest Foundations
- It is a non-profit organization that may, however, engage in commercial activities in a non-habitual manner, or exercise rights arising from its interest in business corporations which are part of the foundation assets. All economic benefits must be dedicated exclusively for the purposes of the Foundation.
- It can be constituted to operate throughout the founder’s life; or after his/her death, as may be determined by the Founder in the Foundation Charter.
- Panamanian foundations are exempt from any income tax derived from foreign sources.
- The assets of the foundation are not affected by the personal liabilities of the Founder or the beneficiaries.
- The Foundation Council must be constituted 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 profits to the designated beneficiaries, without the need of any judicial, administrative or other proceeding, and according to the instructions given by the Founder, through the Regulations.
- A Panamanian Foundation may migrate from or to other jurisdictions which accept it.
