Estate Planning in Costa Rica. ☎️ Wills and trusts.
Estate planning is essential to ensure a smooth transfer of your assets to your loved ones and avoid costly, time-consuming legal processes. In Costa Rica, understanding local inheritance laws, wills, and succession processes is key for residents and expats. At CPG LEGAL, we help our clients plan to distribute their property and assets after passing. We also foresee tax planning and asset protection.
Last wills are essential aspects of inheritance law in Costa Rica, as they govern the distribution of a person’s property and assets after death. Estate planning secures your family’s financial future, ensures your assets are distributed as intended, and minimizes legal conflicts. Whether you own property, investments, or other significant assets in Costa Rica, having a well-structured plan is crucial to:
Avoid intestate inheritance processes.
Reduce tax liabilities and costs.
Maintain control over asset distribution.
Avoid litigation between your loved ones.
Wills and Testaments in Costa Rica:
A will is the most straightforward tool for estate planning. Costa Rican law recognizes different types of wills, and having a notarized will ensures validity and reduces disputes.
Open Will: Executed before a notary and witnesses. This type of will must also be registered in the National Archive.
Closed Will: Sealed and signed before a notary and witnesses.
Privileged Will: Created under exceptional circumstances.
A last will and testament is a notarized legal document. It allows a person to specify how their property and assets will be distributed after passing. Without a will, Costa Rican law dictates the distribution of your assets under intestate succession (Arts. 571–576 of the Civil Code). This may not align with your wishes.
Intestate Succession: What happens without a Will?
If a person dies without a will, their property will be distributed according to “intestate” succession laws. Civil law in Costa Rica establishes the order of inheritance. So, if you pass away without a valid will, Costa Rican law governs the distribution of your estate, which will go to “legal heirs”, as established in articles 571 to 572 of the Civil Code:
Spouses and Children – Priority is given to close family members.
Ascendants – Parents and grandparents.
Siblings and extended relatives.
The estate may be allocated to local educational boards if no heirs are found.
The Role of the Executor (Albacea)
An executor (albacea) manages and represents the estate throughout the succession process. Some responsibilities of the appointed Estate Executor are:
Inventory and valuation of assets.
Payment of debts and distribution of assets.
Periodic reporting and final accounting.
The executor plays a crucial role in the probate process. The executor acts as the estate´s administrator and legal representative, as stated in article 130 of the Civil Procedural Code. Executors may be removed for negligence or conflict of interest, so it´s important to ensure impartiality and smooth estate management. Accomplish this by appointing a trusted legal professional as executor.
Fiduciary Post-Mortem Trusts:
A post-mortem trust (fideicomiso) is a powerful estate planning tool that allows you to:
Protect your assets.
Control the distribution of your estate.
Reduce probate delays.
Unlike wills, trusts provide privacy, flexibility, and efficient asset transfer without judicial intervention.
The Notarized Probate Process in Costa Rica:
Yes, in Costa Rica, probate can be handled through a notary public for uncontested successions. This process, known as sucesorio notarial, offers a faster and more cost-effective alternative to judicial probate. This is the quickest way to proceed. However, to avoid judicial succession and proceed with the expedited notarized probate process, several conditions must be met:
- No disputes among heirs or creditors.
- A valid will or clear evidence of intestate heirs.
- All parties must appear before the notary to agree on asset distribution.
The notary oversees the process, drafts the final declaration of heirs, and records the asset transfer. This option simplifies probate while maintaining legal validity.
The Juditial Probate Process in Costa Rica:
The succession process in Costa Rica is regulated under the Civil Procedural Code (Arts. 115–135). Below is a step-by-step overview:
Step 1: Initiating the Process (Art. 126)
A legitimate party files a petition with:
Proof of death.
List of heirs and preliminary asset inventory.
The court issues an opening resolution and summons heirs within 15 days.
Step 2: Inventory and Valuation (Art. 128)
The executor prepares an inventory of assets.
Assets are valued based on tax records or by an appointed expert.
Step 3: Debt Settlement (Art. 129)
Creditors must file claims.
Approved debts are settled from the estate.
Step 4: Distribution of Assets (Art. 133)
Heirs may agree on asset distribution.
If no agreement is reached, the executor proposes a partition plan for court approval.
Step 5: Final Administration (Art. 130)
The executor submits a final account of the administration.
The process concludes with the distribution of assets to the heirs.
Foreign Successions:
Costa Rican law recognizes foreign adjudications if:
The process followed the laws of the deceased’s domicile.
An exequatur is obtained to validate the foreign decision (Art. 135).
This ensures smooth asset transfer for individuals with properties in Costa Rica and abroad.
Asset Protections During Juditial Successions:
To ensure estate preservation, Costa Rican courts can order:
Asset freezing (e.g., bank accounts).
Inventory verification.
Police intervention for asset protection.
Trusts for Estate Planning:
A trust (fideicomiso) is a legal contract where a trustee holds legal title to property for the benefit of designated beneficiaries. While trusts are not commonly used in Costa Rica, they are a valuable estate planning tool.
How Trusts Work
A testator establishes their last will and creates a trust, transferring assets to the trustee.
The trustee holds the assets in “imperfect ownership”: the trustee appears as the owner but only in compliance with the trust’s rules.
The trustee’s personal assets are legally separated from the trust’s assets, ensuring protection.
Example of a Succession Trust:
Imagine you own real estate and wish to pass it on to your son after death.
You draft a will with a notary public, designating your heirs and assets.
You simultaneously create a trust that holds these assets.
Upon your death, the trustee transfers the assets to the designated heirs per the terms of the trust.
If the trustee fails to comply, your heirs can file for the execution of the will and trust.
Benefits of Trusts:
Avoid probate: Assets transfer without undergoing the judicial succession process, saving time and costs.
Asset protection: Trusts safeguard assets against creditors or disputes.
Tax planning: They offer advantages for structuring inheritance and minimizing taxes.
Before establishing a trust, consult an experienced estate planning attorney or notary public to ensure it meets your needs and legal requirements.
Considering the "Usufruct" mechanism:
Under domain or property laws, the usufruct is the right to use and perceive the fruits of a property. It´s a right over someone else´s property. If you have the usufruct of a house, you can use it and live on it. You can also perceive the “fruits,” in this case, the civil fruits, which is the monthly rent. You can transfer the real estate property to your heir and reserve a lifelong usufruct right to yourself. This will enable you to use and enjoy the property during your lifetime. But since the property has been transferred, there is no probate process upon your death. This is a remedy to avoid probate.
Choose CPG Legal for Estate Planning:
At Pirie Legal, we specialize in estate planning, probate processes, and asset protection for expats, investors, and residents in Costa Rica. Our services include:
Drafting valid wills and trusts.
Guiding you through succession and probate.
Acting as impartial executors to ensure smooth asset distribution.
Secure your legacy today.
Dr. Christopher Pirie Gil.
Estate planning attorney in Costa Rica.