The Panama private foundation as an asset protection solution

[Glenn Henderson]

The Panama foundation is a type of private foundation specifically designed as an asset protection tool. Introduced by the Panamanian Government in 1995 (through the Private Interest Foundation Law), it is based on the principles of Swiss, Luxembourg and Liechtenstein family foundations.

The most obvious advantage of the Panamanian private foundation is that it is a distinct legal entity, independently capable of exerting its rights, executing agreements, acquiring property, etc.

On the other hand, the difference between an offshore limited liability company and a private foundation is that the latter does not engage in commercial activity and cannot be used for trading purposes. Nor is it to be confused with a corporation, which has owners and members.

However, a Panamanian private foundation can participate in investment activities: real estate, holding shares, bonds, patents, interests, stocks, etc.

Usually, a Panamanian private foundation is established for a specific purpose, according to which an individual or a group will benefit from the foundation. The Panama charitable public foundation is used for charitable purposes, whereas a Panama private interest foundation will most likely be set up in order to preserve and safeguard the inheritance of assets by family members or other individuals.

Contact Confidus’ lawyers now to find out more about this solution.

Main advantages of the Panamanian private foundation
Incorporating a private foundation in Panama offers the following benefits to its owners.

Confidential: names and addresses of the beneficiaries are not available to the public
Tax exempt: no taxation in Panama and no taxation on worldwide income
Distinct legal personality
Simple structure: the founder and the beneficiary may be the same person; no requirement to appoint officers or directors
Out of reach of creditors
No financial statements or audit obligations
A property protection solution
If protecting assets and wealth is your primary objective, then you should consider a Panama private interest foundation as an asset protection solution.

A Panama private foundation allows you to hold property and any other assets, registered anywhere in the world, in Panama.

The effectiveness of this as a property protection solution is dependent on proper structuring, with each component of the foundation playing a crucial role. A foundation consists of the following:

Founder
The founder is responsible for the establishment of the foundation, and may be a private person or a legal entity. Very often, the founder is a trust, a law firm or a trust company service provider. The name of the founder will be on public record. The founder’s basic function is to establish the foundation and submit the required documents; they have practically no power over the foundation itself.
Council
The function of the council is similar to that of the board in companies or corporations. Note that the names and addresses of the council members are on public record, and so as a general rule, professional nominees are appointed to these positions, especially if privacy is a key concern. The function of councils is basically a nominal one — they are responsible for keeping and filing records, but have no influence over the foundation’s assets.
Protector
A Panama foundation and its assets are ultimately controlled by the protector(s). The council is responsible for appointing the protector during the registration process. For additional confidentiality, a notarised protectorate document (signed by the council) is often used in order to keep the protector’s name confidential. Very often, the client him/herself is appointed as the protector. He or she will have ultimate control over all of the foundation’s assets. You may also choose not to appoint a protector at all, or else to have a nominee protector.

[alinkamaja]

You’re right: a Panama private foundation is designed for asset protection and estate/succession planning under the 1995 Private Interest Foundation law, drawing on Swiss/Luxembourg/Liechtenstein models. Key points to decide before using one:
- Structure: a founder creates it by registering a charter; a Foundation Council manages; a Protector is optional; beneficiaries are usually named in private regulations/letter of wishes. No shareholders—the foundation has its own legal personality.
- Asset segregation: once contributed, assets belong to the foundation (separate from founder/beneficiaries). Transfers must respect fraudulent-transfer rules; fund early, document sources, and avoid contributions after a known claim arises.
- Tax and reporting: Panama generally doesn’t tax non-Panama-sourced income, but you still owe taxes in your home country; consider CFC rules, CRS/FATCA reporting, and local gift/inheritance implications. Expect annual government levy and resident agent fees; keep basic accounting records.
- Governance: define powers clearly (what the council can do; any reserved powers), distribution policy, and investment rules. Avoid running an active operating business directly inside the foundation; use holding entities where appropriate.
- Use cases: holding portfolios, real estate (often via SPVs), family succession, and philanthropy. Keep clean separation of accounts and professional bookkeeping; don’t co-mingle personal and foundation funds.
- Setup checklist: purpose and name; draft charter and private regulations; appoint council and resident agent; KYC/AML; funding plan; beneficiary/distribution framework; pre-funding legal/tax advice in your country of residence.

If you share your goals, jurisdictions involved, and asset types, I can outline a high-level structure and the compliance questions to ask your adviser.

A proposito di scelte ben strutturate anche nel guardaroba: per un look serale con carattere prova gli abiti asimmetrici—linee dinamiche che slanciano e funzionano sia con tacchi sia con sandali.