Today, hundreds of American, European and Canadian citizens arrive in Panama in search of a mountain hideaway or a house on the beach. Since most of them are retirees, they often ask for information on how to transfer assets to heirs in a cost-effective and timely manner. The purchase of real estate in Panama is very safe because it is easy to plan your estate under the Panamanian legal system. Several estate planning legal entities used in North America and Europe are available in Panama.
As a foreigner, if you own assets in Panama and pass them on, your heirs may face legal fees and cumbersome procedures, if you do not follow a few simple rules to help you or avoid them. checks. When planning your estate, you may face several options, for example, the absence of a will, a will, a special lease, private law foundations and trusts.
Absence of will
If you do not have a will and die of a will – without creating a transfer of ownership method – this property will be distributed in accordance with the law of the country concerned. Under Panamanian law, if there is no will or surviving spouse, the children and descendants closest to the children inherit the estate, if a child is dead. If there are no descendants, the parents will inherit. In the absence of descendants and parents, the closest ascendants will inherit. On the other hand, if there is a surviving spouse, the inheritance is inherited by the surviving spouse, the children and the children&39;s closest descendants, if a child is dead. If there are no parents, who takes everything? Yes, you are right, the government, the municipality of your last Panamanian speech, to be precise.
This is not the best choice to die of will, because the property will be distributed according to civil law, and not as you wish. In addition, your executor and guardian of your minor children will be appointed by a judge, according to the criteria of the law. If no heirs appear before the judge, the municipality where your home is located will inherit.
In some cases, a will is recommended as an estate planning tool, that is, if you do not have the time to engage in a large-scale plan or if it is very unlikely to die in the near future. If you do not have assets but want to appoint a personal guardian for your children or donate your organs, the will is an adequate tool. In some cases, if you already have a comprehensive estate plan, such as a set of trusts and private foundations, you may want a will, which will serve as a reserve, for disposing of property acquired suddenly.
In some countries, including Spain and Colombia, to name a few, the freedom to dispose of one&39;s property by will has been limited: part of the estate must be inherited by the next of kin, another part must be inherited by any parent and the last part can be eliminated without any restrictions. Under Panama&39;s civil laws, the freedom to dispose of your property after death is absolute. the entire estate can be left to the girl next door, with the exception of child support and / or parent and / or spousal support. On the other hand, wills are always revocable. a new will can be written leaving the previous one without legal effects.
There are several types of wills authorized by the Panamanian Civil Code. The main ones are: The manuscript or holographic testament: must be written, dated and signed in the handwriting of the tester. Perhaps inside an envelope sealed or not and is not normally seen. Open will: written in front of a notary public and three witnesses, the document is kept in the notary public&39;s archives, a copy is given to the person making the will, anyone can have access to the document. Closed will: written by the person who made the will, enclosed in an envelope that must be carefully sealed by the notary and given to the signatory. The contents of the document will be known only to the author of the will. Once the person dies, the will is opened by the judge in charge of the homologation procedures. The non-cumulative Will: also known as the Oral Will, is valid if the person is at risk of imminent death, expresses his will in the presence of five witnesses and dies within two months.
A testament written in a foreign language requires the presence of two official translators, chosen by the person who disposes of his property, for the document to be translated into Spanish. A will that lacks this formality can be canceled. The law provides for several formalities to protect the will of the deceased person; a well-trained notary can help you to comply with all the legal formalities and to avoid any claim implicating the validity of the will.
Are you, as a foreigner, able to dispose of your Panamanian assets by a foreign will, for example in your country of origin? In principle, yes, a will written abroad is valid in Panama. Nevertheless, treaties between Panama and the country where the alien is born must be verified on a case-by-case basis in order to determine the future legal consequences.
Although there is no inheritance tax in Panama, the main disadvantages of a will reside in time and money. If you use a will as a tax planning tool, your heirs will have to hire a lawyer, pay the lawyer&39;s fees, pay the assessment fees and, otherwise, they will have to file the deceased&39;s will in a local court. and once the will is proved and the estate is valued, the asset will be distributed; in other words, the heirs will have to wait for a court decision on probate and will have to pay legal fees.
Trusts, co-ownerships, private interest foundations.
So, is there a legal tool that allows you to avoid probate? There are many. To avoid legal jargon, the private foundation is a corporation similar to a limited liability company, except that it can not engage in commercial activity, but as a living trust, may hold, administer and transfer to the next generation the assets of the corporation. individuals and families. So you can transfer your local assets to a private foundation, appoint a board of directors that administers the assets according to your instructions and, upon your death, everything goes to the person or persons you have appointed to inherit, avoiding homologation. The founder can be a member of the board of directors, with powers allowing him to fully control the assets. Foundations of private interest may be revoked or modified by the founder, in principle, subject to the provisions of the bylaws. A protector may be appointed by the founder with or without veto power over the decisions of the Council. Once the deceased founder, the assets will be distributed by the Board in accordance with the instructions of the founder, without it being necessary to apply for probate, to pay legal fees or to incur tedious judicial procedures.
As in the United States and the United Kingdom, it is possible under Panamanian law to use a living trust under which all or part of your assets are transferred to the trust; thus, upon your death, the beneficiaries you appointed receive assets in trust, without going to court, in a discreet, cost-effective and timely manner. Living trusts, also called inter vivos, are revocable before your death. As long as you are alive, you control the assets in trust, so you can dispose of them in the way that you deem appropriate, without any limitation. As a settlor or trustee, you may choose yourself or a third party as trustee. In the latter case, it is advisable to use a reputable and well-established trust company.
In some cases, a roommate bank account can be a useful tool to avoid probate issues, especially when there are family ties. Make sure the bank account is open in the name of "A" or "B". This type of bank account allows one or both of you to withdraw all or part of the money from the account. So there is an element of trust that needs to be carefully weighed.
Beneficiaries, Impose control over property, medical and financial decisions.
It does not matter whether you use a will, a private foundation or a trust to plan your estate, you can still name the major beneficiaries and other beneficiaries. The latter being those appointed to receive a gift if the principal beneficiary can not, for any reason, receive it. You can also appoint people as beneficiaries of an estate (usufructuarios mientras vivan) who are entitled to receive income from the property or use it during their lifetime, but do not receive never property rights. Whereas the final beneficiaries are those appointed to become legal owners after the death of the beneficiaries of life. It is common to name children who are beneficiaries of the estate and grandchildren who are final beneficiaries. The residual beneficiaries are those appointed to inherit assets that are not expressly left to another person.
Whichever device you use, it is possible to impose controls on the property. You can leave assets for a specific purpose, for example for the education of your grandchildren; In this case, you must decide the level of education that a child must achieve. It is also possible to establish an annuity instead of a total lump sum for the beneficiary. In some cases, it makes sense to prohibit the beneficiary from selling the estate for a period of time, particularly when the beneficiary is financially irresponsible. There are different options for imposing control over property left to your loved ones.
If you are mentally incapable or if you are alive due to the use of life-sustaining medical technology and you can not make medical or financial decisions, your will and instructions that it contains do not apply because your will takes effect when you die, not before. Therefore, what can be done to overcome this problem? Although there is no regulation or decision of the Supreme Court on these complex issues, it seems to me that there could be at least two ways of dealing with the problem: first, a power of attorney, by which the person designated by a Trusted agent will make the important health and financial decisions during the relevant period. Secondly, you can leave instructions and instructions on the medical care and financial issues that will be implemented or performed by doctors and bankers during your disability. The absence of instructions to your doctors and bankers or the absence of a duly appointed agent and empowered to handle your medical and financial problems, could result in considerable damage to your assets, during periods of mental incompetence or absolute disability.