Why Set Up a Panamanian Trust: The Ultimate Guide

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

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.

You may also visit our website (www.block3finance.com) to learn more about the range of crypto services we offer to startups, DAOs, and established businesses.