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By Karl Kahler
So if you have a valid last will and testament in the U.S., Canada, or Europe, your house in Costa Rica should be covered, right? Dead wrong. Why you need a Costa Rican will if you have assets in Costa Rica, you may ask? Well, let me explain.
It was news to me that wills from foreign countries do NOT apply to any assets you might hold in Costa Rica. Nor, by the way, does a Costa Rican will apply to any assets you might hold in Arkansas, Alberta, or Austria.
“Your will in the U.S. applies only for U.S. assets,” said Mercedes Sancho, an attorney and notary public with 25 years of experience. She is a partner at the international law firm ECIJA which divides her time between Escazú and Flamingo.
“That’s why it’s so important to have a will in Costa Rica,” she said. “If you have assets in Costa Rica, you need to have a will according to Costa Rican laws.”
What if you die without a Costa Rican will?
If you die without a Costa Rican will, Mercedes said, the Civil Code specifies six levels of possible heirs who can make a claim on your Costa Rican assets. They are, in order of priority:
- Your children, parents, and husband or wife. (If you live with a significant other but aren’t married, see below.)
- Grandparents, great-grandparents, or other direct forebears.
- Legitimate brothers and sisters or any other natural siblings from your mother’s line. So if your mother has children by a father different from yours, these half-brothers and half-sisters are also entitled to a claim. (The law, oddly, does not include half-brothers or half-sisters from your father’s line.)
- Nephews and nieces, i.e., the children of your siblings.
- Legitimate brothers and sisters of your legitimate parents, i.e., your aunts and uncles.
- If you have none of the above, your estate will be donated to local education boards (juntas de educación) to promote education in Costa Rica.
What if you live with a boyfriend/girlfriend but aren’t married?
A civil union between life partners can be formalized before a family judge in what’s called a convivencia de hecho or unión de hecho, both meaning a legalized union recognized by the state. This gives your boyfriend or girlfriend the same right to inherit from your estate as a spouse.
To do this, you first have to live together for at least three years. Then you go before a family judge and say you would like to formalize the union. The judge will declare your union a legal partnership, even though you’re still not married.
You don’t have to do this for your romantic partner to inherit — as long as you include that person in your will. If you die intestate (without a will), and you have a legalized union, your partner will have the same rights to inherit as a wife or husband. But if you die without a will and you have not legalized your union, your significant other has no rights to inherit.
You might have heard that if you live with a woman or man for a certain amount of time, they automatically have the same rights as a legal husband or wife. This is not true, and in fact, if you don’t want your live-in boyfriend or girlfriend to inherit, you are allowed to cut them out of your will if you wish.
When things get complicated
Mercedes said things can get complicated when people die without a will because so many people have the right to make a claim.
“Sometimes you have a dad who passes away, and the three legal brothers are in full mourning at the funeral,” she said. “And then they meet some other new ‘brothers’ appearing from wherever, claiming their rights to the inheritance.’ Like in a soapy TV drama.”
She said, “If you have a will, this eliminates any possible claims and fights between other family members you have.”
And even if there are no suspicious claimants to the inheritance, the process will go faster and easier for the legitimate heirs if there is a bulletproof will.
An exception for money in banks
If you don’t own real estate, a car, or anything else of value in Costa Rica except money in the bank, there’s a highly recommended workaround. You just go to the bank and designate your beneficiaries — for example, saying that in case of your death, the money in your bank accounts is to be divided evenly between your two daughters.
In such a case, the bank would simply disburse this money to your daughters, with no need to start an inheritance or probate case before a court.
But beware of thinking you don’t need a will at all. A will can address something as important as the custody of your minor children, and it can cover all your heirlooms, jewelry, books, and anything else you value.
What is the process of obtaining a will?
Believe it or not, you don’t need a lawyer to draft a will — you need a notary public. In Costa Rica, a “notario público” is a much different profession than in the U.S. or many other countries. Some attorneys here are also notaries, but you’ll need the latter to draft your will.
This process involves declaring all your Costa Rican assets and specifying all your beneficiaries. The notary will draw up a public deed with detailed notes on your assets and your wishes, and this needs to be signed by at least three witnesses.
You will receive a copy of this public deed, called a testimonio, from the notary public. The National Archives will also receive a copy. You will also want to send a copy to your beneficiaries, or at least to the executor of your will (albacea).
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How much does this cost?
The cost of drawing up a will is governed by a fees table, which is based on a percentage of the total assets. You will have to pay a certain amount just to have the will drawn up while you’re alive — but your beneficiaries may also have to pay a significant amount after you’re gone.
“Please be aware that leaving a will is not your only obligation,” Mercedes said. “My advice is to set aside a certain amount of money so your survivors can pay the costs necessary to carry out your wishes. This can be a very expensive process.”
Among the costs your survivors might face are the fees of the notary public, expenses payable to the National Registry and other government bodies, and in the case of real estate, transfer taxes and other expenses.
This is why Mercedes stresses the importance of setting aside money in your will to cover the beneficiaries’ costs of inheriting. To find out what sum might be needed, you’d need to consult with your notary public to estimate the value of your estate and calculate the probable costs.
What about trusts?
One option other than a will is to set up a trust before you buy assets. (Trusts are generally used for assets of considerable value, like real estate, and not just for a new car or other assets of lesser value.)
In a Costa Rican trust, as in other countries, people do not own their assets under their personal name or their company, but the assets are transferred directly to a trust administered by a bank or an escrow agency.
A trust is a formal agreement between you and this entity, saying the trust owns the assets. In the event of your death, the assets are transferred to the beneficiaries you have designated. Or, if you wish, the money can stay in the trust and be disbursed only if the beneficiaries fulfill certain stated conditions. (For example, you may specify that your children inherit only after they turn 21.)
If we were to cover all the possible details here, we would probably have to write a book. In legal matters, the best advice is always to consult a reputable legal professional.
Every case is different, and the best guidance is always the guidance that applies specifically to you.
If you need a reliable lawyer or notary public in Costa Rica to address any legal issue, we invite you to contact Special Places for suggestions. Mercedes Sancho is a Costa Rican partner in corporate, real estate, foreign investment, notarial, and consumer law for the international firm ECIJA Legal. Contact her by phone at (506) 8881-3392 or by email at email@example.com.