Introduction
Panama has long been a favored destination for setting up offshore trusts, thanks to its strong asset protection laws, territorial tax system, and straightforward trust formation process. For entrepreneurs, investors, and high-net-worth individuals (HNWIs) seeking to safeguard their wealth, a Panamanian trust offers a robust and flexible structure.
This guide explores the benefits, requirements, and legal framework of setting up a Panamanian trust in 2025. We also compare Panamanian trusts with Panama foundations and provide practical steps for establishing your trust.
Why Set Up a Panamanian Trust?
A Panamanian trust is an effective vehicle for asset protection, estate planning, and ensuring financial privacy. It is designed to protect assets from creditor claims, legal disputes, and taxation in foreign jurisdictions.
Key Benefits of a Panamanian Trust
Asset Protection: Safeguards assets from creditors, legal disputes, and financial risks
Tax Efficiency: Panama’s territorial tax system exempts foreign-sourced income
Privacy: Confidentiality is protected under Panamanian law
No Forced Heirship: Complete control over how assets are distributed
Flexible Trust Law: Customizable to meet family or personal goals
Global Participation: Allows foreign laws and non-Panamanian trustees
No Minimum Capital: No minimum funding requirement to establish a trust
No Annual Reporting: No reporting or auditing requirements
Panama Country Overview
Location: Central America, bridging North and South America
Capital: Panama City
Population: ~4.46 million (2023)
Economy: Powered by the Panama Canal, financial services, and trade
Climate: Tropical and warm year-round
Panama’s strategic location and financial infrastructure make it a preferred offshore jurisdiction.
Requirements for Setting Up a Panamanian Trust
Panama’s trust framework is based on Trust Law No. 1 of 1984, updated by Law No. 21 of 2017. These laws ensure strong protections while allowing flexibility and confidentiality.
Key Requirements
Settlor: Individual or entity that establishes the trust and transfers assets
Trustee: Manages trust assets; may be an individual or legal entity
Beneficiaries: Individuals or entities who benefit from the trust
Trust Deed: Legal document outlining structure and distribution rules
Registered Agent: Must be a Panamanian lawyer or law firm
Assets: Clearly identified and transferred to the trustee
Confidentiality Requirements
Trust deeds are private and not registered publicly unless tied to Panamanian real estate
Names of settlors, trustees, and beneficiaries are not disclosed
Panama does not automatically share trust data unless tied to criminal activity
Steps to Set Up a Panamanian Trust
1. Choose a Trustee and Registered Agent
Trustee can be an individual or legal entity
The registered agent must be based in Panama
2. Draft the Trust Deed
Include settlor, trustee, beneficiary details
List assets, distribution terms, and duration
Specify applicable legal jurisdiction
3. Sign the Trust Deed
Both the settlor and trustee must sign
Registered agent authenticates the document
4. Register (if applicable)
Only required if the trust involves real estate in Panama
5. Transfer Assets
The settlor transfers assets to the trustee’s control
Panama Foundation vs. Panamanian Trust
| Feature | Panamanian Trust | Panama Foundation |
| Legal Entity | Not a separate legal entity | Separate legal entity |
| Purpose | Asset protection, estate planning | Asset protection, charitable or wealth planning |
| Owner | Trustee holds control | Owned by the foundation; no shareholders |
| Management | Managed by trustee | Managed by a council (minimum three members) |
| Privacy | High | Enhanced with strict secrecy |
| Taxation | Foreign income is tax-exempt | Tax-exempt globally, including gains |
| Control | Settlor has limited control post-setup | Founder may retain some influence |
| Annual Reporting | Not required | Not required |
Which Is Better?
Choose a trust for flexible estate planning and asset control
Choose a foundation for enhanced privacy and stronger protection against forced heirship
Common Uses of a Panamanian Trust
Asset Protection: Shields assets from lawsuits and creditor claims
Estate Planning: Pass on wealth without probate or legal hurdles
Tax Optimization: Structure assets to minimize global taxation
Privacy: Keep ownership and control confidential
Wealth Management: Efficient handling of investments and properties
Conclusion
A Panamanian trust is a reliable, secure, and flexible solution for asset protection, estate planning, and wealth management. With robust legal protections, tax advantages, and privacy assurances, Panama remains one of the top destinations for offshore trusts.
Whether you are safeguarding your assets for future generations or seeking a more private and tax-efficient way to manage wealth, a Panamanian trust offers a world-class solution.
Setting up an offshore trust requires detailed planning and local expertise.
At Block3 Finance, we help you create customized offshore strategies that ensure optimal asset protection, privacy, and tax efficiency.We guide entrepreneurs and investors through every step—from selecting the right jurisdiction to setting up compliant, secure, and tailored trust structures.
If you have any questions or require further assistance, our team at Block3 Finance can help you.
Please contact us by email at inquiry@block3finance.com or by phone at 1-877-804-1888 to schedule a FREE initial consultation appointment.
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