Although foundations are normally set up for charities, Panamá has a unique law allowing for the creation of Private Interest Foundations, a hybrid between a corporation and a trust. The main advantage of a private foundation is that individuals can place their assets under the protection of a legal entity, which holds title to the assets.

A foundation can be created with the heirs becoming the beneficiaries who will then control the foundation upon the passing of the people who set up the foundation. Children of the beneficiaries can become the new beneficiaries, and the process can continue with future generations.

Panama foundations provide several advantages. To begin, probate can be very expensive in Panama and usually takes many years. Foundation assets don’t go through probate, so control is given to the beneficiaries quickly and cheaply.

Secondly, since foundations can own all shares of corporations, bank accounts, investment services, real estate, or any other asset, the beneficiaries are protected from personal injury liability.

Thirdly, because foundations own all their assets, privacy is ensured. A Panama foundation can be useful in transferring funds from offshore. Funds can be donated to a foundation, and later given as educational or special grants to children, grandchildren, or anyone. These foundations are tailored to the client’s wishes.