Many people do not understand the "offshore foundation" or "private interest foundation" (PIF for short).  A foundation can best be described as a trust wrapped in a corporate shell.  You can read about the differences between and foundation and corporation here.

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. 

Many people ask why they need a corporation and a foundation.  Legally a foundation cannot engage in business activities, like marketing and selling a product.  A foundation can, however, own an offshore company.   The offshore company can then engage in business activities.  This is the most common and safe asset protection techniques used in offshore banking and asset protection today.

Unlike onshore trusts, which are commonly used in estate planning, an offshore foundation is strictly enforced by Panama courts.  In the event of death, family members will not be entering into litigation to try and break the foundation.  It is common for an onshore trust to be broken for any number of different reasons.  If you want your wishes followed to the "letter" then a Panama foundation is your best option.

Foundations do not pay tax on foreign sourced funds.  This makes a foundaton a great part of any tax planning strategy.