The Trust in Panama is governed by Law No. 1 of 1984 and Law Decree No. 16 of the same year. It has similar characteristics to the Common Law Trust.

I. GENERAL CHARACTERISTICS:

1. Panamanian law is very broad regarding the content of a Trust Deed establishing only that it shall have lawful purposes.
2. The Trust Deed is a private document and is not subject to registration unless it has real property located in Panama given in trust.
3. To execute the Trust Deed, the signatures of the Settlor and the Trustee need to be certified before a Notary Public.  If the Settlor is not in Panama, the signature may be authenticated by a Panamanian Consulate abroad.
4. The Trust is irrevocable, unless the Trust Deed establishes it to be revocable.
5. A Beneficiary can be replaced or added if the Trust is revocable.
6. The settlor can be a beneficiary of the trust but is not entitled to administer any of its a assets.
7. The Settlor and the Trustee cannot be the same person.
8. The Settlor and the Beneficiary can be a corporation.
9. The assets of the Trust shall be considered separate from the assets of the Trustee. Therefore, they cannot be attached, seized or subject to any lien for obligations of the Trustee.
10. The Panamanian Trust can hold investment portfolios, life insurance policies and any other types of assets, including shares.
11. Even if the shares of a corporation are in the name of a Trust, the Settlor can have signing authority on an account held by the corporation.
12. A Panamanian Trust or its assets can migrate to another jurisdiction.  Although the Trust shall be governed by Panamanian law, the Settlor and the Trustee may choose to apply foreign law in its execution.
13. The Trust is not subject to Annual Franchise Tax.
14. The Panamanian trust law does not establish any rules regarding the Protector and its powers, but a settlor may include appropriate provisions in the Trust Deed.  Therefore, the Protector does not need to be in Panama, his name would appear in the Trust Deed (which is a private document) and his competences of decision are established by the Settlor.
15. The costs to set up a trust are related with the risks, operativity and types of assets the trust will have.  For further assesment, would would need to have more information as to how many clients would be in this position (to determine volume) and the liquid value of the assets in the structure.  For example, a structure with assets of US$1 million would imply different risks than a structure with assets of US$50 million.
16. Additionally, in order to set up a trust, a thorough due dilligence is performed.  Considering the Trustee is a regulated entity, they need to comply with due dilligence regulations (as would a bank).  Therefore, we would need to have information as to the identity of the beneficial owner, settlor, protector, origin of the funds/assets.
17. The Trust will not pay any taxes in Panama on:
    1. assets located abroad
    2. deposits or accounts kept in banks located in Panama
    3. shares or securities, issued by offshore corporations with foreign income or non-taxable income in Panama, even when they are deposited in Panama.

II. THE TRUSTEE:

1.  It is mandatory that the Trustee be registered and licensed as such in the Republic of Panama.

2.  The  Trustee must have an inventory of the assets of the Trust.

3.  The Trustee has to send periodical reports to the Settlor and/or the Beneficiaries regarding the assets held in trust, as established in the Trust Deed.

III. CONTENTS OF THE TRUST DEED:

1. Identity of the Settlor, Trustee and Beneficiary or Beneficiaries (present or future).
2. Whether the Trust is revocable or irrevocable.
3. The rules by which the Trustees or Beneficiaries can be replaced.
4. Detailed description of the assets that are transfered to the Trust.
5. Express declaration from the Settlor to establish the Trust.
6. Detailed description of the Trustee’s obligations including its limitations.
7. Rules of distributing the assets of the Trust to the beneficiaries.
8. Designation of a Resident Agent in the Republic of Panama, who must be an attorney or law firm, to countersign the trust deed.
9. The Panamanian domicile, date and place of signature of the Trust Deed.