Benefits of a Trust and Panamanian Foundation

The main characteristic of a Trust is that the legal right to handle the Trust assets is separate from the right to benefit from them. The trust settlor transfers property to the trustees, who become the legal owners of these assets but are legally obliged to manage them in the best interest of the beneficiaries, who have the beneficial ownership.

A Foundation is a separate legal entity the purpose of which is usually to provide benefits for members of a family. It is usually formed in Panama, BVI or Liechtenstein due to the flexibility offered in these jurisdictions. A Board, appointed by the Founder, is responsible for managing the assets and distributing the benefits to the beneficiaries, in accordance with the foundation articles and by-laws.

One of the benefits of a Trust or Foundation is the ability to limit the first beneficiaries to income and/or part of the assets thereby preserving the family fortune for the benefit of several generations. Another possibility may be for the protection of minors and young adults, by having the Trust or Foundation to support them financially and defer their right to receive a share of the assets until they have reached a certain age.

For tax purposes, the use of a Trust or Foundation allows the elimination of wealth tax that would otherwise be imposed on the assets placed therein, as well as tax on capital gains resulting from their subsequent sale. Income tax is deferred or eliminated as long as the assets are kept within the Trust or Foundation and no distribution is made.

Transmission of the assets to the beneficiaries does not give rise to inheritance tax on the death of the settlor or founder, or if new beneficiaries are substituted for those no longer alive.

Our latest offshore news
Welcome to join our discussions
on Offshore Companies, Incorporations,
Jurisdictions, etc..
The IMF has reported that Panama was one of the fastest growing economies in the world last year.
Cable & Wireless has announced that its principal operations in the Channel Islands, the Caribbean, Panama, Macau, and Monaco are expected to invest more than USD 400 million in Caribbean telecommunications development.
The IMF concluded the 7th Annual Regional Conference on Central America, Panama and Dominican Republic and examined how globalization and economic integration is impacting Central America's tax structures.
The President of Mexico Felipe Calderon has initiated talks with Panama regarding a free trade agreement that has been awaited for a long time.
Panama's long-term sovereign credit rating has been raised by Standard and Poor's to BB+ from BB. This new rating is based on strong economic growth of Panama and continued improvement in fiscal health of its government.
Recently, a new law was passed by Panama's National Assembly to give multinational companies that perform certain tasks a significant tax break. As a result, according to a company specialising in investment property in Panama, the country's real estate sector is expected to experience an unprecedented boost.
The WTO has announced completing a Trade Policy Review of Panama and published the results of the review. The report suggested that the rationalization of assistance programmes and the simplification of the trade regime would help Panama to sustain the economic growth.
Economic growth in Panama is expected to exceed last year's 8.1% because of a strong investment climate, a dynamic services sector and the Panama Canal expansion programme.
The Trade Promotion Agreement has been signed by Panama and the United States to eliminate tariffs and other barriers to the trade in goods and services between Panama and the US.
The Panama Canal Authority (ACP) held a public hearing in Balboa, Panama, with the participation of fourteen representatives from shipping and government.
Panama banks Banco General and Banco Continental have come to the agreement to merge. This merger will create one of the largest financial services companies in the region. The merger is expected to close during 2007.
Panama hopes to become Argentina's replacement on the UN Security Council after Latin American and Caribbean Group (GRULAC) of the UN Security Council delayed as far as some English-speaking Caribbean members were reportedly upset about not being adequately involved in this process.
At a meeting of Panama's President and Executive President of the Central American Bank for Economic Integration (CABEI) agreed that by the end of 2006 Panama will become an 'extra-regional' partner of CABEI. This status will provide Panama with the access of funding of about USD 60 million.
Chile and Panama signed the free trade agreement that opens up 92.5% of the Chilean economy to Panamanian producers. Now most Panamanian products will enjoy a zero tariff when entering Chile's market.