The Private Foundation

A Foundation is a legal entity separate from its creators, constituted through one donation or several donations that form an independent and autonomous estate for a definite purpose and which traditionally has charitable or philanthropic aims for the benefit of a generality of persons. It is a legal entity that is different from any other entity known under common law; it looks like a Trust but operates like a Company.

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Private Foundations were first created in 1926 when the principality of Liechtenstein enacted a law creating 'family foundations' based on the concepts formulated by the Christian Church structures developed since the middle ages.

In 1995 Panama adopted the most appropriate elements of the Liechtenstein law and enacted Law No. 25 of 12th June 1995, creating the 'Private Foundation'.

Amber Business Limited primarily uses Panamanian Foundations rather than those established in Liechtenstein. This is due to significant cost savings that can be made and the ease of administering Private Foundations domiciled in Panama.

Steps in Creating a Private Foundation:

  • A Private Foundation is created when one or more "Founders" formalise a document known as a 'Foundation Charter', which is registered at the public registry in Panama
  • Once registered at the public registry the "Foundation Charter" creates a new legal entity without need for any further legal or administrative endorsements
  • The Founders undertakes to make a donation, (foundation assets), of not less than US$10,000, however the obligation to contribute donations (whether in money or in kind), is not subject to a limited period of time and there is no legal requirement to publicly or officially advise its delivery
  • Once registered, the Foundation enjoys corporate and legal status so there is no uncertainty surrounding its status
  • The Foundation has no 'Beneficial Owner' and therefore no participatory title is issued or needs to be declared from outset
  • As a legitimate corporate legal entity, a Foundation holds 'title' to any assets transferred or donated to it
  • A Foundation can enjoy perpetual existance, or be created with a limited life
  • The registered 'Charter' is in the public domain but key aspects regarding beneficiaries and assets remain private

Uses of Private Foundations

A Private Foundation can be established for the benefit of a person or persons, a family or a specific social purpose.

  • Inheritance Tax Planning
  • Estate Planning
  • Collection of Royalties etc.
  • Owner of Real Estate
  • Investment holding
  • Umbrella or holding structures
  • Art collections
  • Employee share option schemes
  • Charitable purposes
  • Wealth protection
  • Holding insurance, investment or life policies
  • Avoidance of forced heirship rules
  • Asset and family protection
  • Separation of economic interest and control