Estate Planning in Costa Rica: The Living Trust

Estate planning in Costa Rica is a vital step for anyone who wishes to ensure that their assets are managed and distributed according to their wishes. One of the most flexible and proactive estate planning tools available in Costa Rica is the Living Trust. This article explores what a Living Trust is, how it works under Costa Rican law, and why it might be a valuable component of your estate plan.

What Is a Living Trust?

A Living Trust is a legal arrangement created during the testator’s lifetime. It allows the testator to transfer ownership of assets to a trustee, who then manages those assets for the benefit of designated beneficiaries. A living trust is active while the testator is still alive and can continue after their death, depending on how it is structured.

Living Trusts Under Costa Rican Law

In Costa Rica, trusts are regulated under Law No. 7732, which allows for both living (inter vivos) and testamentary (mortis causa) trusts. A living trust in Costa Rica must meet the following legal requirements:Be established through a formal trust deed or contract

1. Designate a trustee who assumes legal responsibility for managing the assets

2. Identify the beneficiaries

3. Clearly define the purpose, terms, and duration of the trust

4. Be registered appropriately depending on the type and location of the assets involved

Living trusts in Costa Rica must also comply with the Civil Code inheritance provisions and cannot override forced heirship rules, which protect certain family members—such as the surviving spouse—from being excluded when marital property is involved.

Benefits of a Living Trust

1. Avoidance of Probate: Unlike a will or testamentary trust, a properly established and funded living trust can avoid the probate process entirely, allowing for a quicker and more private transfer of assets upon the grantor’s death.
2. Asset Management During Incapacity: If the grantor becomes incapacitated, the trustee can step in to manage the assets immediately, without the need for court involvement—offering a seamless transition of control.
3. Flexibility and Control: The grantor can retain control over the trust, act as the initial trustee, and modify or revoke the trust during their lifetime.
4. Privacy: Since probate is a public process, a living trust offers greater confidentiality by keeping the details of the estate and beneficiaries out of public court records.
5. Support for Specific Needs: A living trust can include instructions for supporting minors, elderly dependents, or beneficiaries with special needs, allowing for detailed and customized asset distribution

Considerations and Legal Guidance

While a living trust offers significant advantages, it must be carefully drafted to comply with Costa Rican legal requirements. All assets intended to be part of the trust must be correctly transferred to ensure its validity and effectiveness.

Why a Living Trust May Be Right for You

Establishing a Living Trust in Costa Rica provides both lifetime protection and a streamlined succession process. It is a strategic solution for managing assets, ensuring continuity, and supporting your loved ones in line with your values and financial goals.

If you found this article helpful, you may also enjoy:

• Estate Planning in Costa Rica: A Guide for Foreign Investors and Property Owners

• Estate Planning in Costa Rica: The Will

• Estate Planning in Costa Rica: The Testamentary Trust

Disclaimer: The information provided in this blog post is for general informational purposes only and is not intended to constitute legal advice. While we strive to ensure the accuracy and timeliness of the content, laws and regulations are subject to change. For the most accurate and up-to-date information, please contact our office directly. Some images may be AI generated.