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".

An offshore foundation is used to manage and control assets. This is accomplished through a secret letter of wishes. This letter is, as it's name implies, a private document that is not available to the public. Under no circumstances, is this letter ever required to be made public and is protected by Panama law.

The world has gone tax crazy. Political instability and continuous wars will not be the downfall of civilized countries. Indeed, I propose, that over taxation will be the downfall of the civilized world. Taxes always go up and never down. There is a breaking point. The individual, however, needs a solution today. An offshore foundation is the perfect solution. In addition to being a strong asset protection structure, an offshore foundation can be used to legally bypass estate taxes in the event of a death.

Who can own a foundation under Panama law? Nobody. That's right. A Panama foundation cannot be legally owned by anyone. It is it's own entity. This one aspect makes it a very powerful asset protection vehicle. Also a foundation carries respect that a simple, anonymous bearer share corporation (also available in Panama) does not get. This is important sometimes, when entering into contracts with other companies or opening bank accounts in some (but certainly not all) jurisdictions.

One of the greatest features of an offshore foundation is that a judge or court cannot order funds to be repatriated because a foundation is not owned by anyone. The order would be illegal and no judge would make an illegal order, and if he did, it would easily be overturned.

Corporation? Foundation? What's the difference? -- There are many differences including the fact that a foundation's purpose is not to engage in "for profit" activities. The purpose of an offshore corporation, on the other hand, is just that, to engage in business activities. The core difference, is that a foundation cannot legally enter into for profit activities. It can, however, own a corporation, which can in turn operate in a business environment to make money. The most secure asset protection structure today is the offshore foundation - offshore corporation package.

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.

One benefit that cannot be overlooked is the tax advantage of an offshore foundation. It is not owned by anyone and it does NOT pay tax on any money it manages (as long as it is not derived in Panama).

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If you thinking about an Asset Protection structure you may want to read more about the Panama Offshore Foundation at offshorelegal.org
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