Offshore foundations are key structure for asset protection, estate planning tax free vehicles. These are very similar to offshore trust, but have their own legal personality and no legal owner. Offshore Foundations recently become more widely used and becoming more popular than trusts for offshore asset protection. Most foundations are set up for the protection of the founders' assets and as a tax benefit.
A foundation can be established for a fixed or indefinite period of time and can be used for charitable, commercial or for family purposes.
Offshore foundations can be used in combination with offshore companies to maximize privacy, business confidentiality and to protect assets, accumulate and manage wealth.
Offshore foundations need a founder who can be a person, group of persons or corporations. Offshore foundations are legal entities on their own and can enter into contracts, open bank accounts and do business anywhere.
Offshore Private Foundation formation in tax haven countries is deliberately simple, with the minimal administrative and maintenance requirements. After foundation formation the foundation must be renewed each and every year thereafter to maintain the good standing.
Once the Foundation is established it constitutes a separate legal estate from that of the Founder and its assets are protected from future claims against him. Whilst the assets are retained within the Foundation they can be protected also from claims, which may be made against the beneficiaries.
A foundation is not formed in order to conduct business. It is made to manage and protect its own assets. However it is a very common and useful structure to have a foundation as owner of an offshore company. The profit of the offshore company is regularly transferred to the foundation but should a bankruptcy of the corporation occur, it would not affect the foundation at all.