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Estate Planning 

One of the many things that clients need to consider when planning their move to Panama is Estate Planning.  The issues range from estate and tax planning, business succession planning, administration of trusts or foundations, guardianships, administration of estates, and probate litigation.  

The client's estate is comprised of your real and personal property, prior to distribution.  Real property is real estate (houses, farms, condos, etc.) and personal property includes everything else (cars, furniture, household items, bank accounts, share certificates, investment accounts, etc.).  Estate planning works out how to distribute the real and personal property to the client's heirs or successors.  

The purpose of estate planning is general to preserve the maximum amount of wealth possible for the intended beneficiaries, while maintaining flexibility for the client during their lifetime.  

As our firm is specialised in Panamanian laws only, it is often necessary to consult with lawyers and practitioners in other jurisdictions to offer the client a comprehensive Estate Planning package.  This may include structuring the ownership of worldwide assets of multinational families using foundations, trusts, corporations and other entities based offshore or in the client's jurisdiction.  Trusts and foundations, unlike wills, have the benefit of avoiding probate.  

Clients should be aware that we are not able to provide specific advice regarding the laws applicable to assets in other countries, for example the United States or Great Britain and the tax laws which may apply in the event of their demise.  Therefore, working with other professionals in these matters can be very important.   

We are aware that it is necessary to provide services in all aspects of Estate Planning, including business succession planning, planning for business start-ups, and administration or advice in the administration of a decedent's estate.  

Clients do need to be prepared for meetings to discuss estate planning, as this makes the meeting more focused and effective.  Things which the client should consider before coming to the meeting are: 

1. Where are the assets currently located?  Which jurisdiction? 
2. What assets are liquid?  What assets might be liquidated? What are the advantages or disadvantages of sale versus retention? Which assets should be kept as they are, without liquidating?  
3. Who are the primary family members that have an interest currently in those assets?  Are there likely to be any disputes from those family members upon demise of any person in the group? What competing interests might exist between family members?  
4. What is the most effective means of transferring ownership?  Should bearer shares be used?  Is a Private Interest Foundation appropriate?  
5. Where will estate taxes be due?  What funds will be used for the payment of these taxes?  
6. If you have real estate or other assets in Panama, will your successors want to keep the property(s) and spend time in Panama?  Or would they prefer simply that the assets be liquidated and the proceeds remitted back to them?  
7. If a family business is involved, it is also important to look at what the interests are of the younger generation.  Does it make sense to preserve ownership or management of the business for the younger generation, or should the ultimate goal be the sale of the business, to allow the younger generation the freedom of establishing their own business?  What is the strength of the current non-family management?  Is there a possibility of buy-out by management, if retention of the business within the family is not viable?  

Please see also:  

Many of these are issues which need to be addressed between the various generations, and should be discussed openly within a family.  These are not always easy topics to discuss, and many times the younger generation will not be in a position yet to know what they want or are capable of.  

We provide clients with fee alternatives with respect to acting as administrators of assets, to ensure that clients feel they are receiving value for money.  While we are happy to charge on the basis of a percentage of the value of the assets under management like other law firms in Panama, we also offer clients the option of invoicing on the basis of time expended.  A percentage fee offers a "cap" on possible fees; but many clients feel more comfortable paying for work actually done for issues that arise.  In many cases, where an estate may be large in value, but not particularly complicated in terms of assets or succession or tax issues, the time-based fee alternative can provide considerable savings.  

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Last modified 08-May-2009 12:07 -0400

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