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Three Ways Exist to Pass On Assets at Death

by Garland M Baker on May 22, 2006

According to Consumer Reports, 66 percent of those living in the United States do not have a valid will. Imagine how many expats do not have one in Costa Rica.

Laws governing last wills and testaments are different in this country, and most people never get around to making a valid document.

Famous people like Abraham Lincoln, Andrew Johnson, Ulysses S. Grant, Howard Hughes, Martin Luther King, Jr., and Pablo Picasso all died without a will.

Will is a general term while testament applies to the disposition of personal property. A will is a legal declaration that regulates the rights of others over property and family after death.

While death is the last thing on most people’s minds, having a valid will in Costa Rica is important or assets could end up in probate or stolen. Probate here is a frustrating experience. Marauders prey on the disorganized to steal property.

There are three legal ways to make a will in Costa Rica and a secret tip:

The first is an open will:

Open in this case means public, public in the sense a notary transcribes the document in his or her protocol book in front of three witnesses and files the instrument with the Archivo National. The national archive, located behind the Registro Nacional in Zapote, keeps an index of all persons who have signed an open will in front of a notary.

The process is simple. One writes down his or her wishes and takes a list of assets to a Costa Rican notary, and the legal professional adds the required legalese to prepare it for transcription and filing.

Replacing the record is easy. Filing a new one substitutes all the preceding ones. Losing the original is no problem because replacing it is easy by getting a copy from the national archive.

Anyone can find out if someone has a will by going to the archive and asking if “so and so” has a will filed. Employees there will respond with a “yes” or “no” or say “yes, so and so has three wills filed, the last one was filed on such and such a date and is the current document.”

Only parties to the will can get copies of it. However, in Costa Rica almost anything can be had with a tip.

The second is a closed will:

In this case, one writes down his or her wishes, puts the paper in a sealed envelope and takes it to a notary accompanied by two witnesses. The professional makes a razon notarial, or notary certification, of the act. Someone then holds the envelope for safekeeping.

Upon death, the envelope must be presented to a Costa Rican judge where it is opened and transcribed into an acta or a certification to make it legally valid.

The problem with this approach is if the envelope is lost, no will exists. Another problem is that if the professional is less than honest, manipulation could take place.

The third is a trust:

A trust can be set up at any time. The necessary parties are a trustor, also referred to as a grantor or principal, a trustee and beneficiaries. The last two component parts can be individuals, companies or banks. The grantor sets out his or her wishes for the trustee to follow in distributing assets to the beneficiaries.

Trusts sound complicated but they are not. Assets can be transferred into them tax-free and serve as a good way to protect and bequeath holdings.

Now for the secret tip:

Wills made in other parts of the world can be very hard and expensive to enforce in Costa Rica. The Code of Bustamante, or the code of international private law, regulates foreign legal matters in Costa Rica.

To make use of this advice, all the assets here must be held by a company or companies. This does not work for personal assets because any power given by the living from one individual to another expires upon the death of one of the parties.

When drawing up a last will and testament or trust in another country, the maker should give the executor or trustee a full power of attorney in the company or companies holding assets in Costa Rica. This way the person responsible for a deceased’s will can perform any legal duties in this country without hindrance because the company still exists.

A big problem in Costa Rica is people are busy finding ways to hide everything they own from the U.S. Internal Revenue Service and/or the local tax people, the Dirección General de Tributación, partners, wives or husbands, girlfriends or boyfriends.

Many times in Costa Rica, loved ones cannot find inheritances because assets hidden too deeply are lost forever. Sometimes the living finds it hard to come up with enough money for a simple burial or cremation of the deceased. In some cases, wealthy people leave heirs penniless or with a big legal mess too expensive to unravel.

Certain things like phone lines, including cellular lines, certificates of deposits, public services, insurance policies, and some pensions can be auto assigned to others upon death. It is customary to name a beneficiary when signing up for any one of these items. All a beneficiary has to do to collect is to prove the death of the original owner.

Almost as important as leaving a will is to leave a step-by-step plan for loved ones to follow. This guide can be simple and is not a legal document. It sets out the tasks to follow, giving heirs pointers as to what to do and where important documents are located.

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