Probate is the legal process of settling the estate of a deceased person, specifically resolving all claims and distributing the decedent’s property.
In some countries, after a person residing in that state has died without a valid will or trust, his or her property immediately becomes the property of the spouse, if any, without the need for probate. This is NOT the case for Panama. Under Panamanian law, probate has to be done in the form of a succession process. A succession process in Panama has to be filed in the Courts of Law.
There are two types of Succession Processes in the Republic of Panama.
A. Intestate Succession Process: This is process that has to be filed to a Panamanian Court of Law, without the existence of a Will. The heirs will be the persons designated by the Panamanian Civil Code.
B. Testamentary Succession Process: This is process that has to be filed to a Panamanian Court of Law, with the existence of a Will. The heirs will be the persons designated by the Will.
Succession processes have to be filed through a Lawyer, and their fees will depend on the totality of the value of the assets of the deceased. During the process, private appraisers have to determine the value of the assets. It is much better, in our professional opinion, to file a Testamentary Succession Process, than an Intestate Succession Process; nevertheless, these complicated and not necessary processes can be avoided by using Panamanian Estate Planning Instruments, specifically recommended by my law firm are corporations and Private Interest Foundation.
Experiences: During our years of practice we have heard stories of Expats who after their spouse passes away, have to wait over a year in order to sell the property that is owned by the deceased.
Avoiding probate: This situation could have easily been avoided by purchasing the property in the name of the Foundation or Corporation:
A. With the Foundation: At the moment the person passes away, the secondary beneficiary will immediately become the new primary beneficiary with rights of disposal of the assets.
B. With the Corporation: By informing your heirs where the bearer shares certificates of the corporation that you own are kept, you can immediately transfer ownership, as Panamanian law establishes that Whomever possesses the bearer share certificate controls ownership of the company.
Estate Planning: The best time to do estate planning is prior to moving or doing any investment in Panama. Clients come to our offices all the time, and ask us to help us transfer properties which are owned personally by them, to Corporations or Foundation. At that specific moment they realized the big mistake they made by not investing in their estate planning prior to having made the investment. The reason is simple – now they will have to pay pay all taxes and legal fees related to the transfer of the property in order to ensure they are protected.