Generally, a Panama company owned by a Panama foundation, which owns a bank account is considered the ultimate asset protection strategy. It is stronger than the old swiss numbered bank accounts.
Many people do not understand the "offshore foundation" or "private interest foundation" (PIF for short). A foundation can best be described as a trust wrapped in a corporate shell. The purpose of an offshore foundation is to manage assets. They are managed according to a "secret letter of wishes" which is NOT a public document.
A foundation can be used much like a trust to pass on assets bypassing estate taxes at the time of death. Many countries have made death a taxable event. This makes absolutely no sense of course and every person should consider an offshore foundation (or offshore trust) to protect their assets. An offshore foundation (in Panama for example) has no ownership. Legally there is no way to own a foundation. It can however, own a corporation and a bank account which makes it the cornerstone of some of the best asset protection structures in the world today. A foundation is an iron clad way to secure your assets because no court or judge can ever order you to provide funds that a foundation owns. That would be an illegal order and courts cannot issue illegal orders.
Many people ask why they need a corporation and a foundation. Legally a foundation cannot engage in business activities, like marketing and selling a product. A foundation can, however, own an offshore company. The offshore company can then engage in business activities. This is the most common and safe asset protection techniques used in offshore banking and asset protection today. Unlike onshore trusts, which are commonly used in estate planning, an offshore foundation is strictly enforced by Panama courts. In the event of death, family members will not be entering into litigation to try and break the foundation. It is common for an onshore trust to be broken for any number of different reasons. If you want your wishes followed to the "letter" then a Panama foundation is your best option.
Foundations do not pay tax on foreign sourced funds. This makes a foundaton a great part of any tax planning strategy. Many people ask why they need a corporation and not just a foundation. It is true that a foundation can own a bank account BUT a foundation cannot enter into business activities. For this reason it is quite limited. Having the foundation own a corporation gives you the best of both worlds. It also adds layers to make piercing the corporate veil much more difficult, if not impossible. This gives you more time if something were to happen to move your assets. In Panama, only criminal activity, according to Panama law, will give a court reason to lift your bank secrecy protection.
Panama Foundation F.A.Q
What is a Panama Foundation?
The Panama Private Interest Foundation is an asset protection tool par excellence. A foundation is a hybrid asset protection vehicle that encompasses some of the elements of a trust, a corporation and a will all wrapped up into one that is better than any one of them.
What Can a Foundation Do?
It can own bank accounts, stock brokerage accounts, real estate anywhere in the world, art, gold, boats, airplanes, automobiles and it can own corporations. It is similar to a holding company but much more dynamic.
What Can a Foundation Not Do?
A Panama Foundation may not directly engage in commercial activities. However the foundation can own a corporation from Panama or anywhere else and this corporation that it owns can operate commercially.
Does a Panama Foundation Have a Tax Obligation in Panama?
If all the Panama Foundation income is derived outside of Panama there is no income tax due and no need to file a tax return in Panama. Panama has no capital gains tax on bank interest or stock market gains and no inheritance tax.
Who owns a Panama Foundation?
Under Panama law a foundation cannot have an owner, thus ownership is impossible. This enables one to arrange for the Panama Foundation to own the shares of a Panama Bearer Share Corporation. A Panama Private Interest Foundation is a judicial or unnatural person like a corporation. A offshore trust is not a judicial person; it is merely a written agreement as to how assets are managed. It has its own assets and liabilities separate from those of the founder, protector or beneficiaries.
Foundation Beneficiaries
The foundation can have a secret letter of wishes that is basically beneficiary instructions. These instructions are not in any public registry and are not filed with the government, thus they are private or secret. Beneficiaries can be changed at anytime. The beneficiary is not an owner and their debts are not debts of the foundation.
Foundation Founder
Our law firm normally provides a founder for the foundation so you need not be the founder. The foundation founder is not an owner or controller of the foundation.
Foundation Nominee Council Members
These are nominee employees that are very similar to the nominee board of directors of a Panama Corporation. There is very little they can do. They will execute signed but undated resignation letters. They will also generate to you a general power of attorney so you can act carte blanche on behalf of the foundation.
Foundation Protector
This is an office generally held by the one requesting the foundation be formed. It is a position of control but not ownership. It can be documented with a written employment contract stating duties including signing on the bank account, keeping the books and records and seeing that the overall foundation goals are being met. We generally have these agreements customer created to suit and they are signed by the nominee foundation council members, then notarized and apostilled.
Foundation Asset Protection
Panama has special laws to protect foundation assets from pre-trial freezes except if the foundation does something directly incorrect like it breaks a written contract for no good cause. We prefer the foundation to just act as a holding entity to avoid this.
Foundation Beneficiaries Fighting
The beneficiary instructions set forth in a foundation will be enforced by the Panama court exactly. You will not hear of the children suing each other and fighting over the estate of the parents. There is no inheritance tax in Panama The Panama Foundation is the best possible asset protection vehicle.