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Estate Planning For Canadians Living in Costa Rica

Questions arise from time to time, as to the enforceability of a Canadian drawn Will, with respect to Costa Rica assets and other questions as to general estate planning in Costa Rica. The simple answer with respect to the Canadian drawn Will, is that as long as it complies with the formal requirements of drafting and execution in the jurisdiction where it is drawn, it will be held to be a valid legal document to pass assets located anywhere in the world, to the stipulated beneficiaries, following the Probate of the Will in the jurisdiction where the assets are located.

 

Having said the foregoing, for Canadians who settle in Costa Rica and acquire assets such as property, a car, etc., it is an advantage in the Probate process in Costa Rica, to have a separate Will drawn in Costa Rica, to deal with the disposition of those particular assets which are located in Costa Rica. This particular type of Will is called an “en situ” Will, and makes specific reference to the Canadian drawn Will, which must pre-date the Costa Rica “en situ” Will. The Will in Costa Rica, in no way invalidates the Canadian Will, but merely supplements it with respect to the specific disposition of the Costa Rica assets to the named beneficiaries. The Costa Rica Will allows the Probate procedure in Costa Rica to be commenced immediately following the death of the Testator, rather than waiting for the Probate of the Canadian Will in Canada, followed by a re-probate of the same Will in Costa Rica.

 

Another approach to Estate Planning in Costa Rica, is the use of the Testamentary Trust, as a vehicle to avoid the Probate process entirely. In this scenario, a Trustee, such as your Lawyer, would hold the title to the particular assets subject to the Trust, such as the shares in the Costa Rica corporation that owned your property, on the specific instructions contained in the Testamentary Trust document, as to the disposition of the Trust assets on your demise. As the Testamentary Trust constitutes a contractual relationship between the Grantor of the Trust and the Trustee, in the same manner as a Life Insurance Policy between the Insurance Company and the Policy Holder, the assets are passed to the stipulated beneficiaries, outside of the Estate of the Grantor, on his or her demise. There is usually an annual fee charged by the Trustee for the maintenance and administration of the Trust, along with the safe-guarding of the Trust assets. This, of course, not only avoids the cost of the Probate process, but also accelerates the time for the passage of the Testator’s assets to the beneficiaries, in a significant manner.

 

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