Understanding Survivorship Rights and Estate Planning in Costa Rica

We know firsthand this can be a difficult subject, but we encourage all property owners to read this carefully and take steps to make sure your estate is in order so your loved ones can ensure a smoother process.  Please do not wait and consult with your attorney today.  

Estate planning is a vital process for anyone who owns property or assets in Costa Rica. Whether you're a local resident, expat, or a foreign investor, understanding how survivorship rights work and the legal mechanisms available for estate planning is crucial to ensuring your wishes are respected and your loved ones are protected.

Survivorship Rights in Costa Rica

Costa Rica does not follow the common law principle of automatic survivorship rights, such as joint tenancy with right of survivorship found in many U.S. states. Instead, it operates under a civil law system, where survivorship rights are not automatic and property ownership is governed by detailed rules of inheritance.

Key Points:

• No automatic transfer: Upon the death of a property owner, their share of the property does not automatically pass to a surviving spouse or co-owner unless specific legal steps were taken in advance.

• Probate process: When someone dies, their estate must go through probate (sucesorio) in Costa Rican court, unless the assets are held in a way that avoids it.

• Forced heirship: Costa Rican law enforces “legítima,” a concept that mandates a portion of the estate must go to certain heirs (typically children and spouse), regardless of the will’s contents.

Estate Planning Options in Costa Rica

Because of the lack of automatic survivorship rights and the strict inheritance rules, it is especially important to engage in proper estate planning. Here are some of the most effective options available:

1. Costa Rican Will (Testamento)

A will drafted and executed in Costa Rica allows for clear expression of how you want your assets to be distributed.

• Must be written and signed before a Costa Rican notary public.

• Avoid foreign wills; although they can be enforced, they require a more complex legal process.

• Note: Even with a valid will, forced heirship rules still apply.

2. Holding Property in a Corporation

One popular strategy among expats is to hold property in the name of a Costa Rican corporation or Sociedad Anónima (S.A.).

• Shares of the corporation can be transferred easily without needing to go through probate.

• Ownership and transfer of shares can be structured in advance.

• However, corporate ownership has ongoing costs and administrative responsibilities.

• Important to note, transfer of shares does need to be BEFORE the passing of the shareholder.

3. Trusts (Fideicomisos)

Costa Rican law permits the use of trusts for estate planning.

• A trust (fideicomiso) can be established to hold and manage property during your life and transfer it to heirs upon your death.

• It can help avoid probate and maintain privacy.

• Requires a Costa Rican financial institution or authorized trustee.

4. Joint Ownership with Succession Clauses

Although Costa Rica doesn't automatically recognize survivorship rights, you can still create contracts or property titles that include specific clauses indicating how ownership should transfer upon death.

• This must be carefully drafted with a notary.

• Still may not override forced heirship laws.

5. Power of Attorney (Poder Especial o General)

While not a substitute for estate planning, a power of attorney can help in managing assets if you become incapacitated.

• Can be useful for managing property and financial affairs.

• Must be granted while mentally competent.

Tips for Effective Estate Planning in Costa Rica

• Consult a local attorney: Work with a Costa Rican lawyer experienced in estate planning and real estate law.

• Understand tax implications: There are no estate or inheritance taxes in Costa Rica, but property transfer taxes may apply.

• Keep documentation up to date: Regularly review your will, corporate structures, and property titles.

• Communicate with heirs: Make sure your family or heirs are aware of your estate plan and the location of important documents.

Conclusion

Estate planning in Costa Rica requires careful navigation of civil law, local customs, and inheritance regulations. Because survivorship rights are not automatic, proactive planning is the best way to ensure your estate is distributed according to your wishes and your loved ones are not burdened with unnecessary legal complications. For expats and property owners in Costa Rica, combining a well-drafted local will with strategic use of corporate entities or trusts offers the best protection and peace of mind.  Do not make the mistake that so many past clients have made, and please be prepared for the future and consult with your attorney today.

Written by David Karr

Originally from Washington State (Go Cougs), David Karr is the owner of the Coldwell Banker franchise in Jaco, Costa Rica. With nearly 20 years of experience, David takes a different approach to Costa Rica real estate, focusing on educating clients about the market, navigating them through pitfalls, and focusing as a buyer's agent to make sure clients are presented with all options. If you are looking for an expert in Costa Rica real estate, be sure to contact him today.  US Direct 509.855.7457 or in Costa Rica 506.8718.7216