Private Interest Foundation: Manage Your Wealth and Avoid Probate

Have you ever wondered what will happen to your assets when you're no longer here? For the past 30 years, Panama has offered a powerful and flexible legal tool called the Private Interest Foundation (hereinafter "PIF"),designed to efficiently manage your assets while avoiding the cumbersome and costly probate process. In this article, we will explain in simple terms how a PIF works and why it could be the best ally for you and your family. Imagine a "legal safe" where you can store your assets (properties, investments, shares, etc.) and decide how they will be managed both during your lifetime and afterward. That, in essence, is a PIF. Unlike a commercial corporation, a PIF has no owners or shareholders. Instead, it consists of:

• A Founder (you or the person creating it).
• A Foundation's assets (the assets to be protected).
• A Foundation Council (individuals or entities that manage it).
• Beneficiaries (those who will receive the assets according to your instructions).
• A Protector (optional – ensures your instructions are followed).

Why Is It Advantageous?

1. Avoids Probate (and Headaches)

When someone passes away without an estate plan, their assets go through probate:inventories, notifications to heirs, family disputes, and sometimes years of waiting. With a PIF: Upon the founder’s passing assets, automatically transfer to designated beneficiaries without court involvement or delays.

2. Protects Family Wealth

Let’s say you own a business and real estate. If one of your children has debts or a complicated divorce, these assets could be at risk.  With a PIF: The assets are separate from your personal estate and those of the beneficiaries. Creditors cannot easily seize them.

3. Allows Conditional Inheritance Planning

Want to ensure your child doesn’t squander their inheritance?

With a PIF: You can set clear rules, such as: "My daughter will receive X amount at 25 years old" or "My nephew can only use the money to purchase a home."

How Is It Different from a Will?

A will is useful, but it does not prevent probate (the legal process of distributing assets). Moreover, a will can be contested, causing family conflicts. A PIF, on the other hand: Bypasses court proceedings (assets are transferred as per the Foundation’s Regulations, a private document, keeping family matters confidential). Allows greater flexibility (you can modify beneficiaries or rules during your lifetime). Anyone, regardless of nationality, can establish a PIF in Panama. You don’t need to live in the country, but you must follow these steps:

1. Consult with estate planning attorneys to draft the Foundation Charter (constitutive document) and the Regulations (private document that designates beneficiaries) based on your wishes and rules. The documents should ensure adaptability over time, evolve with family and circumstances, and most importantly, guarantee enforceability.
2. Appoint a Foundation Council(it can be three individuals or a legal entity you fully trust).
3. Most importantly: Transfer assets to the foundation to be protected(properties, whether movable or immovable, shares or stakes in other entities, bank accounts, investments, etc.).

Conclusion If you want to protect your wealth from legal or family disputes, avoid the lengthy probate process, and establish clear conditions for inheritance, then a Private Interest Foundation could be the ideal solution. Panama is one of the most reliable jurisdictions for such structures, thanks to its strong legal framework and privacy protections. For more information, contact us. Our specialized estate planning attorneys will be happy to assist you.