7 common Offshore Foundation Misconceptions explained
by Doug Sitenal
Many people do not understand the difference between an "offshore foundation", "offshore corporation" and an "offshore trust".
The purpose of an offshore foundation is to manage assets. They are managed according to a "secret letter of wishes" which is NOT a public document.
A foundation can be used much like a trust to pass on assets bypassing estate taxes at the time of death. Many countries have made death a taxable event. This makes absolutely no sense of course and every person should consider an offshore foundation (or offshore trust) to protect their assets.
An offshore foundation (in Panama for example) has no ownership. Legally there is no way to own a foundation. It can however, own a corporation and a bank account which makes it the cornerstone of some of the best asset protection structures in the world today.
A foundation is an iron clad way to secure your assets because no court or judge can ever order you to provide funds that a foundation owns. That would be an illegal order and courts cannot issue illegal orders.
There is some confusion about the difference between a foundation and a corporation. A foundation's purpose is to manage funds while a corporation's purpose is to engage in business activities. It is illegal for a foundation to engage in for profit business activities. For this reason, most asset protection packages include a corporation owned by a foundation. This affords all the added security of a foundation and all the flexibility of an offshore company.
Your death should not be the cause of a in-family fight, but all to often this is the case. One child tries to overturn your onshore trust to get control of your assets. Your wishes get trampled on as a sympathetic judge overturns your wishes. An Panama foundation, on the other hand, is rock solid. It cannot be broken. Panama courts time and again have upheld the "letter of wishes" over any kind of legal challenge. This prevents the fighting before it starts. Also it is too expensive to carry on a legal battle in a foreign place. This is a strong deterrent as well.
The foundation is unique because it cannot be owned by anyone and it does not pay taxes on any funds it holds (as long as the funds are not generated by business in Panama -- ie. You cannot open a bakery in Panama and not pay taxes using this vehicle.) All money that is not generated in Panama is held tax free which makes it the perfect part of any tax plan.
If you thinking about an
Asset Protection setup you should consider reading more about the
Panama Offshore Foundlocated ation located at offshorelegal.org Click here for other
unique 'offshore' articles.
