Landmark U.S. Ruling Affirms Panamanian Private Interest Foundation (PIF) as a Robust Asset Protection Tool

At Chanis, our integrated Corporate and M&A core practice includes a strategic focus on international wealth preservation. We specialize in providing expert services and sophisticated advice concerning Panamanian Private Interest Foundations (PIFs). We position PIFs as premier, non-testamentary instruments essential for the strategic estate planning and succession goals of our corporate and private clients and their families.

A recent decision from the Iowa Court of Appeals—In re: The Estate of James Edwin Ibeling (October 29, 2025)—has delivered a significant victory for the integrity of cross-border asset protection structures.

The court upheld the validity and legal effect of a PIF, specifically the Harris 6 Foundation, against a challenge by the deceased Founder’s surviving spouse. The surviving spouse sought to nullify the foundation’s control over real estate it owned in Arizona to claim an elective share against the assets. The ruling is a potent endorsement of the PIF’s autonomy in a U.S. jurisdiction.

Key Legal Takeaways from the Ibeling Decision

• PIF is Not a Revocable Trust: The core of the ruling is its affirmation that a Panamanian Private Interest Foundation (PIF), established under Panamanian Law No. 25 of 1995, is a distinct legal person and is not legally equivalent to a revocable living trust under Iowa statutory law.
• Insulation from the Elective Share: Because the PIF was not classified as a testamentary substitute, the assets held within the foundation were deemed not subject to the surviving spouse’s statutory elective share under Iowa Code section 633.238(1). This confirms the PIF’s ability to successfully ring-fence assets from forced heirship claims in this jurisdiction.
• Autonomous Patrimony: The court explicitly recognized the Panamanian PIF as an autonomous legal entity whose assets constitute a separate patrimony legally independent from the Founder’s personal estate and probate administration.
• Strengthening International Precedent: This decision establishes a crucial precedent in the U.S. for international estate planning. It significantly reinforces the extra-territorial recognition of the robust asset-protection features and structure of Panamanian PIFs against challenges based on forced inheritance provisions in the U.S.

The surviving spouse (referred to as Nancy in court documents) had argued for “functional equivalence” to a revocable trust, which would have brought the assets into the probate estate. The Court of Appeals, however, affirmed the probate court’s denial of her claim, focusing on the distinct legal nature of the PIF under its governing law.

The Imperative of Expert, Jurisdictional Drafting

This case underscores a critical point: The successful defense of a PIF hinges on its meticulous and legally sound drafting.

The drafting of a PIF should only be entrusted to expert international counsel who not only possess a deep understanding of Panamanian Law but who also employ a holistic jurisdictional review. We proactively collaborate with local counsel in the Founder’s home country or state to ensure the Foundation Document is structured to anticipate and withstand potential challenges, such as those related to elective share statutes or fraudulent conveyance rules, guaranteeing the PIF’s effects are upheld upon the Founder’s passing.

Don’t risk the validity of your cross-border plan with generic templates.