Private Foundations.pdf - Mossack Fonseca & Co.

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mechanism by which their children/grandchildren may partake in their parents’/grandparents’
earnings. In Europe, private foundations for the aforementioned purposes are known as “Family
Foundations.”
To carry out scientific, humanitarian, philanthropic, religious or charitable activities or to manage
funds reserved for these activities.
For a combination of all of the above, that is, for the benefit of family members and other
persons and institutions. This type of multiple purpose private foundation is known in Europe as
a “Mixed Foundation.” The standard Foundation Charter creates this kind of Private Foundation.
As a Panamanian Private Foundation need not be exclusively circumscribed to benefits for family
members, it is typically used to distribute assets or earnings to other individuals (either friends or
loved ones) designated as Beneficiaries of the Foundation, either upon its incorporation,
subsequently at a specific time designated by the Founder, or in the event the Foundation is
dissolved.
To act as the administrator of employee profit distribution plans and employee pension plans.
As a substitute for a will, thus avoiding complicated inheritance procedures, for which the
Foundation Council would distribute the estate assets. With regard to the matter of successions,
and as subsequently explained more fully in detail, it is noteworthy to mention that Panamanian
Law sets forth that the provisions on forced heirs of the Founder’s domicile or of the
Beneficiaries’ domicile do not affect the validity of the Foundation created in Panama nor the
transfers made to the Foundation, as same cannot be revealed or declared null by alleging
inheritance rights.
As a substitute for marriage articles or pre-nuptial agreements.
To own shares, interests and stocks of private companies. In this case, the Private Foundation
acts as a holding company. This is one of the basic and most common uses of Panamanian
Foundations.
As a vehicle for collecting royalties and other types of returns.
As a vehicle for investing in time deposit accounts, stocks, bonds or other securities.
As the owner of real estate or valuable movable property such as art work.
To insure assets against different adverse situations, such as excessive taxes for those who
reside where the assets are located, future claims by creditors, forced heirs or political or
economic instability in the country where the client resides.
To manage bank accounts, whether numbered or not, as this is a discreet and safe vehicle.
For any specific asset protection plan. It is important to note that, if assets are transferred to a
Panamanian Private Foundation with the purpose of evading creditors, such creditors shall have
the right to object to such transfers, but they shall have only three (3) years in which to do so.
YA/Pub./10.2007