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Wills, Inheritance & Death in Costa Rica

Presentation by Roger A. PetersenAttorney at Law

San José, Costa Rica

www.plawcr.com / www.costaricalaw.com

WILLS

WHY A WILL ?

� A will allows you to dictate who getswhat. Die without one, and thegovernment decides who gets what,without regard to your wishes oryour heirs' needs.

Foreign Will in Costa RicaIs my Foreign Will valid in Costa Rica –

YES - However ……

Exequatur

� This is a Recognition Action. I t is cumbersome and requires you to:

(1) Obtain a judgment from the probate court in the country where the Will was issued.

(2) Have the foreign court Judgment apostilled for use in Costa Rica

(3) Have the documents officially translated into Spanish and certified by the M inistry of Foreign Relations.

(3) Hire an Attorney to file for the recognition process before the First Chamber of the Supreme Court.

(5) Begin an abbreviated probate process in Costa Rica.

Solution Have a Costa Rican Will

� You can limit the Costa Rican Will to cover only your assets located in Costa Rica.

� Leave your foreign (U.S. or Canada) Will intact to handle your assets located outside of Costa Rica.

Note: U.S. Estate Planners are trained and accustomed that there should only be one will in effect at a time. However when other countries are involved this may not be the best approach.

Types of Costa Rican Will

� Testamento Cerrado

� Closed Will

� Mystic (Secret) Will

� Placed in a sealed envelope in the presence of a Notary Public.

� Testamento Abierto

� Open Will

� Notarial Will

� Granted Before a Costa Rican Notary Public

Witnesses to the Will

� You need 3 individuals to witness yoursignature on the Will.

� I f you do not speak Spanish you will require anadditional 2 Witnesses that will act astranslators of the content of the Will.

NUM BER ONE HUNDRED FOUTY EIGHT: Before me,M ARIA SANCHEZ PEREZ, Notary Public with office in SanJose, personally appeared WALTER HARRISON, of legal age,divorced, businessman, resident of Escazu, Urbanization BelloHorizonte from the first entrance one hundred meters south andfive hundred west with passport number BR 1646432 andSTATES: That he appears in this act to state this Last Will andTestament according to the laws of Costa Rica and the followingclauses: FIRST: That he names ANNE O’BRIEN, no secondsurname on account of her Canadian nationality, of legal age,married, businessperson, resident of Vancouver, Canada and bornon December 23, of 1971, only heir of all my assets, property,share certificates, bank accounts which are located in Costa Ricaand which I may have at the time of me death

Name Your Beneficiaries

SECOND: That he designates ANNE O’BRIEN as the Executorof the estate for all purposes as required by law. In her absence Iname a substitute, Mr. RONALD JONES, no second surname onaccount of his Canadian nationality, of legal age, married,businessperson, resident of 200 Royal Street Vancouver, Canada,THIRD: In the event the testator and the beneficiary die in thesame act he confers his entire estate to the children of ANNEO’BRIEN which may living. FOURTH: That it is his intentionthat this Last Will and Testament only apply to assets that arelocated in Costa Rica. THAT IS ALL.

Name the Executor of the Estate and A lternative Executor

If the intent is for this to be a Costa Rica only Will –then indicate so in the Will

Open Wills are Filed

Notary Public Drafts Property Deed

Your Corporation Owns Property

You own the Shares

CORPORATION

The Corporation in Costa Rica

Spouses are on the Board or Managers of the corporation.Either acting jointly (limited) or acting independently of each other (full authority).

The Corporation as an Estate Planning Tool

It is NOT automatic. The shares of your corporation will not “ automatically” pass to your heirs.

They will pass according to the terms of your Will

The Corporation as an Estate Planning Tool

� Board of Directors of S.A. or Managers of S.R.L

Spouses acting jointly or independently of each other allows spouse to take over management of the corporation

� You could put your children/ heirs in the corporation with limitations.

� “ ……. in the event of the death, or medically declared incapacity of either the President or Secretary of the corporation the Treasurer will have unlimited Power of Attorney..”

Joint Tenancy PropertyWith Right of Survivorship

In the United States

Joint Tenancy Property“ Propiedad en Derechos”

� NO automatic “ RIGHT OF SURVIVORSHIP”

� Costa Rica Joint Tenancy means one spouse owns ½ and the other the other ½

� In the event of death you must probate the Will to have the other half transferred to the surviving spouse

In Costa Rica

POWERS OF ATTORNEY

1. Poder GeneralisimoThe most expansive one. Needs to be recorded

2. Poder General. Generally use for administration – More restrictive

3. Poder Especial. Issued for a specific act or series of acts that may be required

POA Can be Revoked. POA ends with the death of the issuer.

MEDICAL DIRECTIVES

To agree to, refuse, or withdraw consent to any type of medical care,treatment, surgical procedures, tests, or medications. This includes decisionsabout using mechanical or other procedures that affect any bodily function, suchas artificial respiration, artificially supplied nutrition and hydration (that is, tubefeeding), cardiopulmonary resuscitation, or other forms of medical support, evenif deciding to stop or withhold treatment could or would result in my death;

Sample M edical Directives

To have access to medical records and information to the same extent that I am entitled to, including the right to disclose health information to others;

to authorize my admission to or discharge (even against medical advice) from any hospital, nursing home, residential care, assisted-living or similar facility or service;

Testamento Vital o De Vida

Sample Used in Spain

Costa Rica Medical Directives & Euthanasia

� Costa Rica Active Euthanasia is illegal – criminal offense

� Costa Rica Passive Euthanasia where you refuse medical treatment is a “ grey area”

� Article 46 Civi l Code “ Every person may refuse to besubmitted to a examinations, medical treatment orsurgery…”

� No Laws or Regulations directly addressing Living Wills in Costa Rica.

INHERITANCE

Dying with or without a Will

WITH A WILL INTESTATE NO WILL

INTESTATE

This means you die without having a valid Will

CONSEQUENCES

The Costa Rica Civil Code KICKS in

Intestate Distribution of Assets

1st DEGREE: Spouse (or free union spouse), children and parents of thedeceased

2nd DEGREE: Grandparents

3rd DEGREE: Natural born siblings on the mother’s side

4th DEGREE: The nephews of the deceased

5th DEGREE: The uncles of the deceased

6th DEGREE: The Board of Education

What is Probate ?

The action or process of provingbefore a competent judicial authoritythat a document offered for officialrecognition and registration as the lastwill and testament of a deceasedperson isgenuine.

The Probate Process

� JUDICIAL PROBATE

� Filed before a Civil Court with proper jurisdiction

� The rules of Civil Court procedures applies to the proceeding

� Takes longer depending on the Civil Court involved.

� NOTARY PROBATE

� Requested before a Costa Rican Notary Public

� Only Available if there are no minor children

� Only available if there are no contested issues between heirs

The Probate Process

� 1. Opening of the Probate Process

� 2. Take inventory and appraisal of Estate Property

� 3. Declaration of the legitimate heirs of the Estate

� 4. The ratification of the Estate and the Executor

� 5. Distribution and Partition of the assets of the Estate

COMM UNITY PROPERTY

� Community Property is made up of the assets that come into a marriage during the marriage.

� In the U.S. you have “ community property” states (California) and separate property states.

� Costa Rica does apply community property. However it crystallizes upon the DIVORCE of the parties or DEATHof one of the parties.

Forced Heirship and Community Property

� Testator is free to dispose of their property i.e. no forced heirship.

� - However there are limitations.

� 1. M ust provide for the support of minor or disabled children. Article 595 Civil Code.

� 2. Support for spouse & distribution of community property. Family law dispositions come into play. Spouse entitled to ½ of community property.

Distribution Example

� Asset: Real Estate worth $300,000. Assume it was purchased during the marriage.

� Heirs. The spouse and 2 children.

� Surviving spouse gets $150,000 as community property.

� The remainder, $150,000 would be the value of the Estate.

� That would be divided 1/ 3 each. $50,000 for spouse and $50,000 for each of the children.

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COSTA RICA TAXESINHERITANCE

Inheritance / Estate Taxes

� Costa Rica applies territorial taxation.

� Costa Rica does not apply an inheritance tax.

� Watch for foreign remittance tax if the proceeds are generated in Costa Rica and sent to a foreign domiciled heir.

Property Transfer Taxes

� To transfer real estate from the deceased to any of the heirs the applicable property transfer, registry fees and Notary fees are due payable.

� Estimate 3.5% of the value of the asset as reported in the inventory of the Estate.

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DYING IN COSTA RICA

What Happens ?

FORM DS-2060

Costa Rica Death CertificateThe Civil Registry

http:/ / tse.go.cr

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Where and How You Die Define the

Procedure that is Required

Death in the Hospital

� The hospital will deliver the certificate of death to next of kin.

� Next of kin may accept delivery of the body through the funeral home of their choice

� Funeral services are arranged

� The deceased is buried in the cemetery of their choice or is cremated or repatriated.

Death at Home Due to Documented I llness

� The lead treating physician may issue a certificate of death.

� Funeral arrangements are made with the funeral home of your choice.

� The deceased is buried at the cemetery their choice, cremated or repatriated.

Death From Accident, Violence or unknown factors

� The proper Legal authorities must be contacted so that the body may be removed with proper legal authorization.

� The deceased must be transported to the forensic lab so that an autopsy can determine the cause of death.

� The authorities will deliver the deceased's body to family members, along with the certificate of death.

� Funeral arrangements and burial, cremation or repatriation are arranged.

Medical Autopsy

� A M edical Autopsy is mandatory:

� 1. Death due to violence (homicide, suicide, accidents)

� 2. Natural death when there was no medical treatment

� 3. Natural death with medical treatment but suspicious circumstances.

CREM ATION

Requirements for Cremation

� The certificate of death or medical report is required.

� Costa Rica Law requires that bodies for cremation have been autopsied first. Some local funeral homes have their own licensed autopsy facility.

� I f the body is in the Forensic Lab then this has already been done and no additional procedure is required. If not, an autopsy may be conducted by a pathologist. The funeral home can assist with this procedure.

REPATRIATION

Repatriation Insurance

You Can’t Take it With You

www.CostaRicaLaw.comFor M ore Information Visit

Thank You

www.plawcr.com / www.costaricalaw.com

506-2288-2189 Ext. 101 e-mail : rpetersen@plawcr.com

Lic. Roger Petersen