Is establishing a Panama asset protection foundation for a client ethical for a professional?
The general rules of ethics provide that a professional has a 100% duty of loyalty to a client. There is no ethical duty to a non-client except that a professional may not “defraud” any other party by his conduct. Fraud in this context does not mean fraudulent conveyance. Fraud connotes deceit and means an intentional misrepresentation or omission made by one party to induce another party to change their position, with the other party justifiably relying upon that misrepresentation or omission, and doing so to their damage. Fraudulent conveyance is a remedy statute and has none of the elements of deceit. In summary, any client has a right to establish an estate plan which would include a foundation. Any asset can be transferred into an estate planning foundation providing there is no restriction on its free alienability. The fraudulent conveyance laws do not create or establish alien or security interest in another person’s assets. All they provide is a right in the creditor to pursue
