Estate Planning in Costa Rica
Planning for Passing Away in Costa Rica: Avoiding Pitfalls and Protecting Your Legacy
The pura vida lifestyle may seem simple, but estate planning in Costa Rica requires careful preparation to protect your family and ensure your legacy is preserved. While options like a notary will or trust are available, understanding the pros and cons of each is crucial to avoid unnecessary stress, delays, and financial burdens for your loved ones.
Option 1: Notary Will
A notary will is the most affordable and straightforward way to plan your estate in Costa Rica.
Advantages
• Low Cost: A one-time expense to draft and record, with no recurring fees.
• Regulated Fees: Executor and legal costs are fixed or percentage-based, as outlined by statutory law.
• Efficient Probate: In straightforward cases with no disputes, the probate process can be completed within 2–3 months.
• Basic Protection: For smaller estates, a notary will is a practical option that provides some level of security.
Disadvantages
• Dependence on Executor: The lawyer drafting your will often becomes the executor, essentially becoming a paid employee of your estate. This can lead to delays or potential conflicts.
• Extra Costs: Each task the executor completes incurs fees, which can add up in cases involving loans, debts, or multiple beneficiaries.
• Complex Assets: Properties, vehicles, and other assets not explicitly listed in the will may face administrative hurdles, adding time and expense.
• Outstanding Liabilities: Loans or debts tied to the estate can delay asset distribution, causing stress for beneficiaries.
Option 2: Trust or Corporation
For more complex estates, placing assets into a trust (fideicomiso) or corporation (Sociedad Anónima, S.A.) can simplify inheritance and avoid probate altogether.
Advantages
• No Probate: Assets transfer directly to beneficiaries, bypassing the probate process entirely.
• Streamlined Transfers: Assigning shares of the trust or corporation to beneficiaries ensures quick distribution of assets.
• Reduced Bureaucracy: Helps avoid complications with tax filings and ownership transfers for properties, vehicles, and other significant assets.
Disadvantages
• Higher Initial Costs: Setting up a trust or corporation is more expensive than drafting a will.
• Recurring Fees: Trusts often require annual administration fees, while corporations may have ongoing maintenance costs.
• Unnecessary for Simple Estates: Smaller or straightforward estates may not benefit from the added complexity.
Key Considerations
• Trustworthy Attorney: No matter the option, choosing a reliable and experienced attorney is essential to avoid costly errors.
• Combination Strategy: A hybrid approach—using both a notary will and a corporation for high-value assets—may provide the best balance between simplicity and protection.
• Estate Complexity: Choose a solution that matches the size and intricacy of your estate. A notary will works for basic needs, while trusts or corporations are better for large or multifaceted estates.
• Bank Accounts: Add beneficiaries to your bank accounts for immediate access to funds upon your passing.
Bottom Line
Estate planning in Costa Rica isn’t one-size-fits-all. A notary will is a cost-effective option for smaller estates, while trusts or corporations simplify inheritance for more complex arrangements.
By organizing your estate ahead of time, you can minimize legal and administrative hurdles for your family. Thoughtful planning ensures your wishes are honored and protects your loved ones from unnecessary stress and expenses. Regardless of your choice, the most important step is to act now to secure your legacy.
BuySellCostaRica works with competent, experienced professionals who can make the process of Estate Planning in Costa Rica worry free.
Better now than later.
Contact us today: +506-8509-0190