Asset Protection and Panama Foundations

With the governments in the United States and other countries taking more and more of their citizens’ privacy, people search to find privacy and security for their property, personal and corporate information. While asset protection is currently a hot topic in both corporate and private sectors, the judicial system of many countries have systematically weakened their trust structures. While this weakening has negatively impacted trusts, offshore banking has become a better option and one of the best country's for both offshore banking and asset protection is Panama.

The fact that many countries are attempting to pry into their citizens’ privacy is precisely why more people are seeking asset protection, both personally and corporately, in institutions such as the offshore Panamanian Foundation. Panama has become the second largest banking center in the world (behind Switzerland) and possesses perhaps the best secrecy laws. In Panama, it is possible both for a person to privately protect his assets without anyone knowing the owner and for a corporation to hold and protect the assets of an individual without anyone being able to ascertain their identities. This high level of asset protection makes offshore Panamanian Foundations very attractive to people in common law countries.

While most people agree that the Panamanian Foundation is excellent for asset protection and that the offshore banking in Panama is the best in the world, many people do not know how to create a Panamanian Foundation. Panamanian Foundations are relatively inexpensive to start; it is as little as $900 to start a Panamanian Foundation as opposed to $10,000 or more for Liechtenstein Foundation. The Panamanian Foundation can be created by one or more people or by a corporation. A foundation charter must be created and is, in essence, the incorporation documents for a Panamanian company. Like the incorporation documents, the foundation charter document is public record. The foundation has a council of three or more members and is similar to a corporation, which is directed by three directors or board members. These directors of the foundation are called Council Members. In addition, similar to a trust, a private protector may be named to have special oversight authority. It is typical that the owner takes this position, especially if nominee council members are being used.

Inside a Panamanian foundation, the assets are protected. Since they are sole and separate property of the foundation, they cannot be taken to satisfy any judgment, liens or obligations of the founder or the foundation’s beneficiaries. Assets are protected against judgments for divorce, lawsuit and other liabilities.

The Panamanian foundation offers the best of a trust and the best of an offshore corporation. While a foundation can’t be used to conduct business, it can own the shares of a company engaged in business activities. It is also permissible for the foundation to engage in any activity, which will increase the value of assets, meaning that a foundation can buy and sell real estate, make investments and conduct offshore banking.

Since there are no shares of ownership in a Panamanian foundation, the founder does not own the foundation and as such gains important tax reporting and protection benefits with this.

In reality, there are quite a number of practical uses and strategies for the Panamanian Foundation. As an asset protection vehicle, there is probably no better entity in any jurisdiction at the present time for this purpose. With the ability to conduct offshore banking privately, the foundation and the privacy laws of Panama also allow for excellent identity protection.

For more information or to set up a Panama Corporation or foundation, please contact us.