Inheritance taxes: how to plan your estate

Planning your estate is a very important process, above all for avoiding high inheritance taxes

Inheritance taxes: how to plan your estate

In a context where taxes on inheritance and donations have noticeably increased in various nations, confronting the situation is inevitable.

We always recommend resorting to Private Interest Foundations of Panama in these scenarios. These structures have been shown to be the best system for organizing an estate.

What are inheritance taxes?

This is a tax imposed on the increase in assets and resources  on a person who receives a donation or inheritance. Before the heirs can take advantage of the inheritance, they must unavoidably pay said tax.

The world’s worst country for this is Spain. According to data gathered by the Economists General Counsel the maximum rate on inheritances arrives at 81.6% of the amount received.

Other countries where extremely high inheritance tax rates are applied are Belgium (80%), France (60%), Denmark (52%), Switzerland (50%), and Luxemburg (48%).

Private Interest Foundations of Panama

Currently, one of the most used strategies for avoiding the payment of elevated inheritance taxes is to turn to a Private Interest Foundation of Panama. This is an institution that arises starting with the donation from a person or entity. The founder establishes, in the Foundational Act, what the private interest propositions of said Foundation are.

These Foundations can’t carry out permanent commercial activities, but they can invest. There are no stockholders or members, only a Foundational Counsel, a unit in charge of administering the Foundation’s assets. Said Counsel must be formed by a minimum of three natural persons or one legal person.

The Foundations have been shown to be a mot versatile legal figure, which facilitates estate planning and avoiding inheritance taxes. For example, being an alternative to a will is one of the primary ends of Foundations.

With a Foundation, you can avoid the forced application of blood rights. This is when local laws obligate the payment of a percentage of the inheritance to first-degree family members.

If you have doubts about how to use Private Interest Foundations of  Panama for saving assets and patrimony so as to avoid the negative effects of inheritance taxes, you can consult with us.  

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