POLS provides asset protection through the formation of a Panama Private Interest Foundation, also know as a Panama Foundation. There are several uses for a Panama Foundation and they are described below.
Uses of a Panama Foundation
Panama Private Interest Foundations may be established for the benefit of a person or persons, a family, or a specific social purpose.
In general, Panama Foundations are used for asset protection as holding entities for personal assets such as shares of corporations, bank accounts, investment accounts, real estate, or any other asset.
Instead of holding the asset, such as shares in a corporation, in their personal name or in bearer form (which could be risky if lost), the person would establish a Private Interest Foundation in Panama that holds and owns the shares. Hence, the advantage of using the Panama Foundation as a shareholder for their corporation is to remove ownership from one’s personal name (or through a Bearer Share arrangement), and transfer ownership to the name of a foreign entity which does not have owners, rather has privately appointed beneficiaries, which are anonymous. In this way, there is no question as to who owns the company, since the company’s shares are issued to the Panama Foundation name.
The Panama Foundation provides additional advantages other than just ownership. For example, the Panama Foundation can be useful in transferring funds offshore or receiving funds from offshore. In some cases, people use Panama Foundations as vehicles for these purposes. Some people donate their funds to their Panama Foundations and later use the Panama Foundation to give educational or special grants to their children, grandchildren, or any one else they choose.
In general, Private Interest Foundations may not engage in habitual profit-making commercial activities as a corporation can. Nevertheless, they may carry out commercial activities from time to time, as long as the profits of those activities are used for the objectives of the foundation. For example, a Private Interest Foundation may engage in passive real estate investments, or banking and other investment activities, such as investing in bank time deposits (Certificates of Deposit – CD’s), stocks, bonds, mutual funds, options, money markets, etc. so long as the proceeds from these investment activities are for the benefit of the beneficiaries of the foundation. Panama Private Interest Foundations should not be utilized for traditional business activities such as providing services or selling products to the public, for example, it should not be used for opening a restaurant, a consulting service, or a retail or wholesale business.
Under Panamanian laws, the assets held in a Panama Foundation are non-sequestrable, and non-embargable, meaning that the assets cannot be seized, or have liens placed on them, in the event of a legal attack. For this reason, most wealthy Panamanians hold their assets in Private Interest Foundations, to protect their assets. Please note, however, that this applies only to civil attacks, and not to criminal cases. Also, this protection applies only to those assets held within the Panama jurisdiction
In addition to the above, the Panama Private Interest Foundation is used for testamentary purposes, for passing family patrimony (assets) from one generation to the next, while avoiding inheritance taxes, probate, and all the legal process, time, and expense that a succession process involves. The beneficiaries of the foundation receive the assets exactly as they were left, without any deductions, taxes, or expenses. This is another reason most wealthy Panamanians hold their assets in a foundation, and non-Panamanians are now realizing that they can benefit from the using the same structure.