You need a Will and Life Insurance in Costa Rica for the purpose of Estate Planning.
When moving to Costa Rica, for some strange reason, people often think that they don’t need estate planning. It is so important to address this issue when moving to a foreign country as you are acquiring new assets and yes, new debts.
Can My Foreign Will Work? Yes, But…
The laws here are different than they are back home. Your Will from another country is only valid through a recognition act called “exequatur”. This is a cumbersome task as it requires the following:
- Obtain a judgment from the probate court in the country where the will was issued.
- Have the foreign court judgment apostilled for use in Costa Rica.
- Have the documents officially translated into Spanish and certified by the MINISTRY OF FOREIGN RELATIONS.
- Hire an attorney to file for the recognition process before the FIRST CHAMBER OF THE SUPREME COURT.
- Begin an abbreviated probate process in Costa Rica. This will only take approximately 2-3 YEARS!
An Example: The American Borrower
There was an American borrower that died leaving behind a wife and two children. In Costa Rica, you cannot have two owners of a bank account (a joint account). Only 1 owner with the wife as a signatory on the account. If you go into the bank and tell them that your husband has passed away, they immediately shut down your bank account, which can leave you penniless until you settle the estate.
If the borrower passes away, the interest payments still have to be made — highlighting the absolute need for life insurance which this borrower did not have. And if the interest is not paid on a loan, it goes into arrears and the foreclosure process starts. Even if the lender gives you a little more time as this lender did, he can only wait so long for the borrowers’ spouse to figure out a solution.
Like many people who just lost a spouse, the depression is overwhelming and the last thing you want to do is make major financial decisions that affect you and your children. Once a foreclosure starts, the panic sets in to sell the property if you can. If you do not have a will, then you cannot even sell the house until it goes through a lengthy probate process.
The interest will accumulate, late fees will accumulate, and now add foreclosure expenses to the bill. This makes the whole situation very, very costly. This leaves one with very few options in the end except to sell the house at a very low price, just to cover these costs.
A Will and Life insurance would definitely have alleviated all of this. If you are elderly and do not qualify for life insurance, at least a Will can expedite the probate process and give your spouse access to assets so that they can make an exit strategy and pay off the loans.
What We Can Do For You
In Jaros Costa Rica we never want to see the previous situation happen to anyone, we have the financial experience in our work group to help you.