Estate planning is one of the most important decisions a foreign investor can make. Many people come to do business in Costa Rica or purchase real estate, corporations, or enterprises, assuming that their estate plan from their home country will cover their local assets. This is not the case, or at least not the most practical and cost-effective way to handle such an important matter.
Having a succession plan abroad does not automatically make it enforceable in Costa Rica. Even when it is, it must comply with specific formalities and court procedures that can take years to complete. The best solution is to establish a separate, parallel structure that directly manages or distributes your Costa Rican estate according to local law.
Costa Rican law provides several estate planning options, including wills, corporate share structures, and trusts. Regardless of which option is chosen, the key is to prepare in advance so that your estate can be handled smoothly when you are no longer here.
Why Foreign Investors Need Estate Planning in Costa Rica
Many foreign investors believe that international wills or estate plans will automatically apply to all their assets worldwide. However, Costa Rica’s legal system operates under civil law, which differs from the common law systems used in countries such as the United States, Canada, or the United Kingdom.
Without a Costa Rican estate plan, your assets may fall under local intestate succession rules, meaning the government decides how your property is distributed. This can lead to unnecessary taxes, long delays, and family disputes.
Estate planning in Costa Rica ensures that your investments, property, and corporations are transferred efficiently and according to your wishes.
Legal Options for Estate Planning in Costa Rica
- Wills (Testaments): A local Costa Rican will is the most straightforward estate planning tool. It ensures that your Costa Rican assets are distributed according to your wishes and not subject to foreign interpretation. Foreigners can create a Costa Rican will through a local notary public, and it can coexist with wills made in other countries.
- Corporate Structures: Many investors choose to hold property or business assets through a corporation (Sociedad Anónima or SRL). In these cases, transferring corporate shares can be faster and more cost-effective than going through probate court. Corporate structures also provide privacy and asset protection benefits.
- Trusts and Fiduciary Arrangements: Trusts are increasingly popular in Costa Rica as a tool for asset management and protection. A trust allows you to appoint a trustee who will administer assets for beneficiaries, ensuring control and compliance with your estate goals.
Each of these structures has unique tax and legal implications, which is why personalized legal advice is essential.
Common Cross-Border Challenges
Managing assets in multiple jurisdictions can create legal and logistical challenges. Among the most common are:
- Jurisdiction conflicts: Different countries’ courts may claim authority over your estate.
- Tax implications: U.S. or European residents may face double taxation without proper planning.
- Probate delays: Estates without a local plan can take years to settle in Costa Rican courts.
- Language and document issues: Wills and legal papers must be properly translated and notarized.
A bilingual attorney familiar with both Costa Rican and international law can help minimize these risks and ensure compliance on both sides of the border. Contact us for a Consultation
How to Protect Your Assets in Costa Rica
1. Identify your assets: Create a comprehensive inventory of all property, corporations, and accounts in Costa Rica.
2. Consult a Costa Rican estate attorney: Seek advice from professionals experienced in local and international law. At American Law Partners, we specialize in helping foreign investors protect their assets, design tax-efficient estate structures, and comply with Costa Rican legal requirements.
3. Select the most suitable legal structure: a will, corporation, or trust may be the best fit for your situation.
4. Keep documents current: Update your estate plan regularly as your investments evolve.
5. Coordinate globally: Align your Costa Rican plan with your home country’s estate structure to avoid conflicts.
Our bilingual team ensures your plan aligns with both local and international laws, providing peace of mind for you and your family. Contact American Law Partners today to start building a reliable, locally compliant estate plan for your Costa Rican investments.
Frequently Asked Questions (FAQ)
- Do I need a separate will for my assets in Costa Rica?
Yes. A will from another country is not automatically valid in Costa Rica. A local will ensure faster and more efficient asset distribution.
- Can I include my Costa Rican property in a trust?
Absolutely. Trusts are a common and effective tool for managing Costa Rican assets, especially when designed by a local attorney.
- What happens if I die without a Costa Rican estate plan?
Your assets may go through a lengthy court process and be distributed under Costa Rican intestate laws, which might not reflect your wishes.
- Are there inheritance taxes in Costa Rica?
Currently, Costa Rica does not impose inheritance taxes on most estates, but proper legal planning can help prevent future tax complications.
- How can American Law Partners help me?
Our team assists foreign investors with wills, trusts, and corporate structures, ensuring compliance with Costa Rican laws and protecting your international estate.
About the Author
This article was written by Terry Steele, Attorney in Costa Rica (cédula de identidad 08-0111-0536, bar license 36269).
With over 35 years of residency in Costa Rica and extensive experience advising international clients in real estate, corporate law, and cross-border investments, Terry specializes in helping foreigners navigate property purchases and residency applications with confidence.
