The trust is a juridical act allowing a person called founder of trust or trustor to transfer assets to a person called trustee. The trustee then administers or disposes of the assets in favor of a trustee or beneficiary (who can be the founder of trust himself).

Panama continues to be an important site for trust operations. Revised trust regulations were approved by Executive Decree No. 16 of October 3, 1984, amending the tax treatment of trusts. With this legislation, income on property and on transfer of assets is exempt from taxation when a resident trust has foreign source income and/or foreign situs assets.

Trust

The trust instrument will contain:

1. The complete and clear designation of the founder of trust, trustee and beneficiary.
2. When it refers to future beneficiaries, sufficient circumstances must be indicated for their identification.
3. The sufficient designation of the trustees or substitute, if any.
4. The description of the assets or the patrimony or share on which it is constituted.
5. The express declaration of the willingness to create a trust.
6. The powers and obligations of the trustee.
7. The prohibitions and limitations that are imposed to the trustee in the exercise of the trust.
8. The rules of accumulation, distribution, or disposition of the assets, revenues and products of the assets of the trust.
9. Place and date of the constitution of the trust.
10. The designation of a resident agent in the Republic of Panama (lawyer or a law firm), who will endorse the trust instrument.
11. Address of the trust in the Republic of Panama .
12. Express declaration that the trust is constituted in accordance with the laws of the Republic of Panama.