1 Private Interest Foundations

A Private Interest Foundation is an entity very similar to the trust. The main reason for this, is because there will not exist shareholders to a Foundation, there will be Beneficiaries. As there are no owners, only Beneficiaries, Private Interest Foundations can not be sued for claims against there Beneficiares.

The Private Interest Foundation is the ultimate estate planning instrument.

A Private Interest Foundation, usually consist of two basic documents.
1. The Foundation Charter
2. The By laws.

I. The Foundation Charter.
The Foundation charter shall contain the following:

1. The name of the Foundation in any language with characters of the Latin alphabet. The names shall not be identical or similar to any other existing Foundation in the Republic of Panama. The name shall include the word “Foundation” to distinguish it from natural persons and other varieties of juridical persons.

2. The Foundation’s initial capital may be in any currency in an amount equivalent toUS$ 10,000.00.

3. The name and addresses of the Foundation Council.

4. The domicile of the Foundation.

5. The registered agent’s name and address. This person must be a Panamanian attorney or law firm. The resident agent must countersign the Foundation charter prior to its registration at the Public Registry.

6. The purposes or objects of the Foundation.

7. The manner in which Foundation beneficiaries are named.

8. The reservation of the right to modify the Foundation charter when deemed convenient.

9. The length of time during which the Foundation shall endure.

10. How the foundation assets shall be disposed of at liquidation.

11. Any other lawful clauses which the Founder may consider necessary.

This charter will be registered at the Panamanian Public Registry, and usually is the only Public Document.

II. The Bylaws.

The By laws are a private document, that is not necessary to register, that will specify how the Foundation is to be managed. They should be in concordance with the Foundation Charter. The by laws will have specific instructions from the Founder, as for instance, who will be the Beneficiaries to the assets of the P.I.F.

The By Laws may include:

1. Appointment of the Protector (if any). The Protector may also be appointed through a separate private document, if desired.

2. Appointment of the Beneficiaries (Again, this may be a separate private document).

3. What assets are being transferred to the Foundation.

4. When and how assets are to be distributed to the Beneficiaries.

Common parties in the Foundation

A. The Founders: Could be one or more natural or legal persons of any nationality. As the law is curiously silent on the transferability of the Founder’s rights and obligations, there is nothing to prevent the transfer of these rights and obligations from a nominee founder as registered in the Foundation Charter to the real founder by private document. It is possible for the Founder to retain certain controls with respect to the Foundation, although these should be set out clearly in the Foundation’s Bylaws.

B. The Foundation Council is Supervisory Body of the Foundation. It can be composed of three persons, or one legal entity.

C. The Beneficiaries..The Beneficiaries are the natural or legal persons that are entitled to the benefit of the Foundation.

D. The Protector. The Protector is the person who has ultimate Control of the Foundation and all assets held within it. Basically, he can protect the Foundation and the beneficiaries against acts in their detriment conducted by the Foundation Council.

Advantages

1. Anonymity: The PIF can provide anonymity to its beneficiaries as well as to the Founder.

2. Asset Protection: It will protect the assets from creditors, ex wives, etc.

3. Estate Planning Vehicle: A much better estate planning instrument than a will. By structuring your assets through a PIF, you could avoid the problems of probate and a succession process.

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