You've bought property in Panama, opened a bank account, and built a new life here. But what happens to those Panama-based assets if you pass away? Most expats don't think about this until they're already deep into their relocation — and that's a mistake. Panama's inheritance law is based on the Spanish civil law tradition, which means it operates very differently from common-law systems in the U.S., Canada, or the UK.
The short version: your home-country will alone may not protect your Panama assets. Here's how to fix that.
A U.S., Canadian, or European will can be recognized in Panama, but it must go through Panama's probate courts, be translated and apostilled, and may still be overridden by Panama's forced heirship (legítima) rules for assets located in Panama. For significant assets, a separate Panama instrument is strongly advised.
Panama follows Roman/civil law traditions for inheritance, inherited from Spanish colonial law. The key concepts foreign residents need to understand:
Panama's Civil Code reserves a legally mandatory portion of any estate for "forced heirs" — primarily children (biological or adopted) and, in some cases, surviving spouses. You cannot fully disinherit a child through a Panama will, regardless of what your home-country will says about your Panama assets.
The mandatory reserved share (legítima) for children is typically 50% of the net estate value. The remaining 50% (the cuota de libre disposición) you can direct as you wish via will or other instruments.
If you die without a will and with Panama-based assets, Panama's Civil Code applies an intestate succession order:
Many expats assume their home-country estate plan automatically handles their Panama condo or bank account. It doesn't — not without additional steps. Intestate estates in Panama go through Panamanian probate court, which is slow (often 1–3 years), expensive, and language-dependent. Your heirs will need a Panamanian attorney regardless.
There are four primary tools for managing what happens to your Panama assets after your death. Each has different costs, protection levels, and complexity:
The Panama Private Foundation — formally the Fundación de Interés Privado or FIP — is one of Panama's most powerful estate planning tools and is frequently underused by foreigners. It was created by Law 25 of 1995 and is one of the most flexible private interest foundation laws in the world.
Unlike a trust (which requires a trustee to hold legal title) or a corporation (which has owners), a Foundation has no owners. Assets transferred into a Foundation are no longer owned by you personally — they belong to the Foundation. This has critical consequences:
You — the person who creates and funds the Foundation. The Founder may also be a Beneficiary and may reserve the right to modify the Foundation during their lifetime.
3 members (can include attorneys) who manage the Foundation's assets per the Foundation Charter. They serve as the governing body and execute the Founder's instructions.
Named in the private Regulations (not the public Charter). Can include family members, charities, or other entities. Receive assets per your instructions.
An oversight role — often a trusted advisor or family member who monitors the Council's actions and has power to remove Council members.
Public document filed with the Registro Público. Names the Foundation and Council but not the beneficiaries. Required to create the Foundation.
Your detailed private instructions — who receives what, when, and under what conditions. Not filed publicly. This is where your estate plan lives.
| Consideration | Panama Will | Panama Foundation (FIP) |
|---|---|---|
| Subject to forced heirship | Yes, limited by legítima | No — assets are Foundation's, not yours |
| Goes through probate | Yes — Panamanian probate court | No — transfers per Foundation Regulations |
| Speed of transfer on death | Slow (1–3 years, court process) | Fast — Council activates immediately |
| Privacy of beneficiaries | Will becomes public record | Beneficiaries in private Regulations |
| Setup cost | $500–$1,500 | $2,000–$5,000 |
| Annual cost | None after drafting | ~$700–$2,400/year |
| Best when assets are… | Simple; heirs are natural forced heirs anyway | Significant; blended family; non-standard beneficiaries |
Simple Panama will plus joint property registration. Forced heirship aligns with your intent anyway.
Forced heirship could divide assets between current spouse and prior children. Careful structuring needed.
Without forced heirs, a will is usually sufficient, but Foundation adds probate-avoidance benefit.
Multiple properties = complex probate. Foundation holds all properties and avoids multi-property estate administration.
Panama Foundation can include conditions (age requirements, educational milestones) before distribution — not possible with a basic will.
U.S. persons creating a Panama Foundation must report it to the IRS (Form 3520 / 3520-A). Consult a U.S. international tax attorney before proceeding.
If you already have a will from your home country and want to include Panama assets, it can be recognized through a process called exequátur. Requirements include:
This process typically takes 6–18 months and costs several thousand dollars in legal fees. For estates with significant Panama assets, a dedicated Panama instrument (will or Foundation) is usually the more efficient solution.
When you meet with a Panama estate planning attorney, bring: