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Panama - Constitution of Private Foundations

7. Constitution of Private Foundations

The law on private foundations is quite modern and flexible, even though it was inspired in the traditional European foundations. The foundation documents consist of a Foundation Charter and a private document called Regulations.

The Foundation Charter, protocolized through a Public Deed, must be registered at the Public Registry, but the Regulations are not required to be registered and remain a private document. It is within the Regulations that most of the confidential information regarding beneficiaries and manner of distributions is normally included, thus providing an excellent vehicle for anonymity.

The law also provides the option of designating a Protector or auditor or any other supervisory body, to oversee the actions of the Foundation Council (the Administrative body of the foundation, which may be a juridical entity or no less than 3 natural persons, which may also be appointed as president, secretary and treasurer).

Also according to the law, assets endowed to the foundation constitute a separate patrimony from the personal assets of the Founder(s) and of any other person(s) or entity(ies) contributing to the foundations, and these cannot be contested on inheritance points, thus clearly defining the legal ground in respect to forced heirships found in certain other jurisdictions.

This is a useful instrument in estate planning and protection of assets: like a trust, but operates very much like a corporation.

 

 

Cost of constitution and annual maintenance are also very much like those of a corporation, as detailed in the Corporate Services section, except when the Foundation Charter and/or the Regulations are very long or complex, when necessary additional legal fees and other costs will apply.

Foundations operate free of any taxes when income is generated outside of Panama and may change their domicile to or from another jurisdiction at any time.

They must be constituted as non-profit entities, with a minimum endowment value of no less than US$10,000.00.

 

The memorandum "Constituting Your Private Foundation" is available upon request.

 

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