Georgetown Trust Blog

What are the Benefits of a Private Interest Foundation?

Posted by Georgetown Trust on Jul 29, 2015 8:00:00 AM

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A Panama Private Interest Foundation, or PPIF, is a foundation that doesn't require a single owner and falls on the spectrum between a private offshore business and an individual's trust.

A private interest foundation follows a letter of wishes, which is written by the founder of the foundation and outlines what the goals and intent of the foundation should be today and in the future.

Protectors and council members then carry out the wishes of the founder through the foundation, which might be personal in nature, for charitable purposes or for estate planning.

Anyone considering a private interest foundation from Panama should get familiar with the many benefits, just some of which are outlined below.

Confidentiality for All Involved

A big reason to consider a Panama Private Interest Foundation is to provide confidentiality to all that are involved with the process. The founder, for example, may not wish to have publicized that he or she is setting aside assets.

Beneficiaries, who could be children, spouses or charities, may also not want their eventual benefit from the foundation to be made public. Thanks to legal protection, anonymity and privacy, confidentiality is a big perk of the PPIF.

Assets No Longer Belong to the Founder and are Protected

Once the founder has transferred the desired assets into the foundation, they are legally no longer his or hers. This means that they can't be seized as a result of legal action, they can't be frozen by another government and they can't be taxed or classified as income or assets in the future.

Assets Within the Foundation Can't Be Taxed

Once the assets are placed in the private interest foundation, they can be structured and restructured at any time. Profitable moves within the foundation will not be taxed, even if they generate significant income, thanks to the tax-friendly jurisdiction of Panama.

The notable exception is that all foundations have to pay a minimal $400 USD annual fee called the annual franchise tax. 

Minimal Patrimony of $10,000 to Start

Some international and offshore foundations require substantial investments of capital right at the beginning, often putting these options out of reach for everyone but the extremely wealthy.

In Panama, however, these private interest foundations only need to start with a minimum of $10,000. Called a patrimony, this sum can be increased at any time if necessary.

Provide for Loved Ones After the Founder's Death

A foundation can be structured so that it essentially pays out to beneficiaries and folds entirely after the death of the founder, which is one option in terms of estate planning.

However, the PPIF can also continue on in perpetuity according to the wishes of the founder, and this can happen even after the death of the founder. The private interest foundation will continue to operate as it has always done, and beneficiaries can continue to receive financial support for the future.

Accounting for Foundation Can Be Completed and Stored Anywhere

Establishing a private interest foundation in Panama doesn't mean that those running the foundation have to operate within the country. In fact, they can even store the books and accounting records elsewhere if it is more convenient.

A Panama Private Interest Foundation clearly offers a variety of benefits. Whether for charitable donations over time or help for dependents in the near future, a private interest foundation can cover all the bases.

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Topics: Foundations