As people search for more secure, private ways of protecting their assets, more of these searches for offshore foundations are ending successfully in Panama. Panama foundations may be the best method for protecting what you have earned.

The Panama foundation is a type of business structure that combines the benefits of a trust and a corporation, yet it is neither. A foundation is a legal concept that is different from any other entity known in Common Law because it is not the legal personification of a person or group of persons, as is a corporation, instead it's a legal entity that does not have owners and it typically has the express purpose of benefiting a specific group of individuals.

The principle of a "Foundation" was started during the Roman Empire, thanks to the influence of Christianity. For example, the Catholic Church was viewed as a divine foundation and various groups within the church had the responsibility for administration. These foundations were not created for private needs, identity protection or for offshore foundations; they were formed for serving the needs of a community. Several hundred years later, the legal entity referred to as a "Foundation" still exists and these business structures are widely used around the world for personal and private needs.

The concept of a Private Interest Foundation began when the Principality of Liechtenstein created the "Law of Persons & Companies" in 1926 which created the "Family Foundation" for the benefit of the members of one or more families and the "Mixed Foundation" for the private benefit of not only families, but also for people and organizations beyond the family unit. Eighty years later, the principles of this type of structure are used to form foundation structures today.

Typically, wealthy families in Europe have utilized Family Foundations incorporated in the Principality of Liechtenstein for estate-planning and to ensure an unmolested transition of assets to the family's beneficiaries. Today, Liechtenstein Foundations can cost as much as $25,000 to incorporate, and as much as $10,000 per year to maintain. The protection of assets is very good but the cost is prohibitive to many people. This is where the business structures of Panama, referred to as Panama foundations, become so valuable.

Panama implemented laws in 1995 to create the Panamanian Private Interest Foundation. Although this is a fairly new structure, this offshore business structure was created following the pattern of the Liechtenstein Foundation, which had successfully existed for over seventy years. In fact for those who seek a foundation structure, Panamanian Private Interest Foundation has several advantages over its Liechtenstein predecessor; it is much cheaper to establish, it is cheaper to maintain and it offers more flexibility while still protecting the assets of the holder.

To understand the concept of the Panamanian Private Interest Foundation, it is necessary to understand the difference between a trust and a corporation. Most people create corporations as a method to reduce tax liabilities and protect their assets from lawsuits or claims against their estate. The corporate entity is used around the world to keep its assets and liabilities separate from the personal wealth of the owner. Trusts are commonplace in Common Law countries and used as a haven in estate planning. The common interpretation of trusts is that they are actually, in the eyes of the court, unique individuals and have rights under the law. Because of this interpretation of trusts, they offer asset protection but little or no identity protection for those who hold them.

This highlights another important fact; English speaking countries typically use Common law and many non-English speaking countries traditionally use Civil Law. Panama is a country that uses Civil Law and because of that, Panamanian Foundations are business structures that can offer better protection than trusts in Common Law countries, such as the US. Because of these benefits, an offshore foundation in Panama can be an excellent means of asset protection for many Americans.

Overall the Panamanian Private Interest Foundation is far superior to a trust in the United States. While it is true that a trust does offer a certain level of asset protection, it does not offer any identity protection. Trusts are required in countries such as the United States to report their financial activity the same as a person, whereas an offshore foundation is not viewed this way. Because of this trusts offer no identity protection as well as only offering marginal asset protection. Panamanian Private Interest Foundations, on the other hand, offer a wide range of protection, both for assets and identities. Some of these benefits are:

• True identity protection - By combining a foundation structure, a Panama Corporation, a Panamanian attorney and Panamanian banking, you may have formed the most secure method of identity protection of any offshore foundation in the world. Identity protection is a government protected right in Panama and they do not allow intrusion from other countries.
• True asset protection - Again, using this business setup (Offshore foundation, a Panama Corporation, a Panamanian attorney and Panamanian banking) you create strong protection for your assets. Your company's (or your) assets cannot be garnished to satisfy judgments or liens and the financial statements of your foundation structure cannot be compelled by courts in other countries because the records are anonymous.
• Tax haven - An offshore foundation has the welcome effect of a tax haven because Panama does not tax foreign-derived income and the holdings of the foundation structure are unavailable to other countries.
• Inflation hedge - The holdings of a business structure are effectively sheltered from inflation for two reasons. First, Panama has historically low inflation rates. Secondly, since other countries do not have access to the holdings of your offshore foundation, you do not have to worry about the effects of the high inflation in countries like the United States.
• Convenience - A Foundation structure is very easy to create and maintain. If you use a capital company from Panama, most times they are able to create your offshore foundation without you even making a trip to Panama.
• Cost - An offshore foundation is a legal entity that is inexpensive to both create and maintain.
• Residency - If your level of investment in Panama is high enough, you can receive the added benefit of an offer of residency. This gives you the rights and privileges of Panamanians, with the exception of the right to vote. Residency offers additional benefits and eliminates the need for visas when you want to visit.

A foundation structure is a unique business entity in the world today and one reason that Panama is one of the leading locations for manufacturing and business development. A foundation structure is easy to form and you don't even need to travel to Panama to do it. The benefits that you receive from forming your Panama foundation will be a valuable gift that you can pass down to your beneficiaries.