What Do US Expats in Costa Rica Need for Estate Planning?
US citizens living in Costa Rica need estate plans that work in both countries. Your US will doesn't automatically govern Costa Rican assets, and Costa Rica's forced heirship rules can override your intentions. You need a US will for US assets, a separate Costa Rican will for CR assets, durable powers of attorney valid in both jurisdictions, and healthcare directives that Costa Rican providers will recognize. Skipping this creates exactly the kind of mess your family shouldn't have to solve during grief.
Why Cross-Border Estate Planning Is Different
Most Americans have a will, maybe a trust, and assume that covers everything. When you own assets in two countries, it doesn't.
Here's the core problem: the US and Costa Rica have completely different legal systems governing what happens to your stuff when you die. The US uses common law. Costa Rica uses civil law. They don't agree on who gets what, how property transfers, or which documents are valid.
The families I work with who skip this step create problems that take years and tens of thousands of dollars to resolve. The families who spend a few thousand dollars on proper cross-border estate planning give their heirs clarity instead of chaos.
US Estate Tax Rules for Expats
The US estate tax applies to US citizens regardless of where they live or where their assets are located. Moving to Costa Rica doesn't change this.
| Factor | Details |
|---|---|
| Exemption (2026) | $15 million per individual ($30 million for married couples), permanently set by the One Big Beautiful Bill Act (July 2025), indexed for inflation beginning 2027 |
| Tax rate | 40% on amounts above the exemption |
| What's included | All worldwide assets: US accounts, Costa Rican property, foreign bank accounts, everything |
| Filing requirement | Form 706 if gross estate exceeds exemption threshold |
| Portability | Surviving spouse can use deceased spouse's unused exemption (if elected) |
The key nuance for expats: Your Costa Rican property, Costa Rican bank accounts, and any other foreign assets are included in your US gross estate. The IRS doesn't care where the asset sits. If you own it, it counts. This is one of the US tax obligations that follow you abroad regardless of where you live.
The Sunset Risk Is Gone
The One Big Beautiful Bill Act, signed into law in July 2025, permanently set the federal estate tax exemption at $15 million per individual, indexed for inflation beginning in 2027. This eliminates the previously scheduled sunset that would have cut the exemption roughly in half. For most families, the $15 million per individual ($30 million for married couples) exemption means federal estate tax is no longer a primary concern. However, estate planning remains essential for asset transfer, probate avoidance, and cross-border coordination.
Costa Rica's Succession Law (Forced Heirship)
This is where most Americans get surprised. Costa Rica has forced heirship rules that can override your will.
Under Costa Rica's civil code, certain family members have protected inheritance rights:
| Heir Category | Protected Share |
|---|---|
| Surviving spouse | Right to marital share of community property, plus potential usufruct of family home |
| Children | Equal shares of the estate after spousal rights |
| Parents (if no children) | Inheritance rights when no descendants exist |
What this means in practice: You cannot simply disinherit your children from Costa Rican assets through a US will. The Costa Rican legal system may not recognize that instruction.
Property Held in a Corporation (S.A.)
Many expats hold Costa Rican real estate through a Sociedad Anónima (S.A.) or Sociedad de Responsabilidad Limitada (SRL). This creates an important distinction:
- Shares in the corporation are personal property, potentially governed by US law
- The real estate itself is Costa Rican property, subject to Costa Rican succession rules
- The transfer mechanism may be share transfer rather than property transfer, which can simplify probate but doesn't eliminate succession law
This is not a DIY situation. You need a Costa Rican attorney who understands cross-border estate structures.
The Two-Will Strategy
The standard approach for US expats with Costa Rican assets:
Will #1: US Will (or Revocable Trust)
- Governs US-situs assets: bank accounts, brokerage accounts, retirement accounts, US real estate
- Names executor familiar with US probate
- Includes specific language excluding Costa Rican assets (to avoid conflict with Will #2)
Will #2: Costa Rican Will
- Governs Costa Rican assets: real property, local bank accounts, corporate shares in CR entities
- Must comply with Costa Rican formalities (notarized, witnessed per civil code requirements)
- Drafted by a Costa Rican attorney who understands forced heirship rules
- Names an executor (albacea) who can operate within the Costa Rican legal system
Critical: The two wills must not contradict each other. They should explicitly reference each other and clearly delineate which assets each governs. An inconsistency between the two can trigger expensive litigation in both countries.
Powers of Attorney Across Borders
A US power of attorney is not automatically recognized in Costa Rica. You need both:
| Document | US Version | Costa Rica Version |
|---|---|---|
| Financial power of attorney | Durable POA under state law | Poder especial or poder generalísimo executed before a Costa Rican notary |
| Healthcare directive | Advance directive / healthcare proxy | Medical directive recognized by Costa Rican healthcare providers |
| Scope | US bank accounts, investments, property | Costa Rican bank accounts, property transactions, government interactions |
Healthcare Directives
Costa Rica's healthcare system, both CAJA and private providers, may not recognize a US advance directive. Have your Costa Rican attorney prepare a medical directive that Costa Rican hospitals will accept. Include:
- End-of-life preferences
- Organ donation wishes
- Designated healthcare decision-maker
- Spanish translation of relevant medical history
Beneficiary Designation Conflicts
This is the planning gap that catches the most families. Your US retirement accounts (IRA, 401k) and life insurance policies transfer by beneficiary designation, not by will. If your beneficiary designations conflict with your wills or Costa Rican succession law, you've created a legal puzzle.
Common conflicts:
- US IRA names second spouse as beneficiary; Costa Rican law gives children from first marriage forced heirship rights to CR assets
- Life insurance proceeds go to a trust that doesn't account for Costa Rican forced heirship
- Retirement account designations haven't been updated since the move
The fix: Review every beneficiary designation annually. Make sure they align with both your US estate plan and your Costa Rican will.
Foreign Trust Reporting
If you use a trust in your estate plan (common for US families with $1.5M+ in assets), living abroad adds reporting requirements that intersect with your broader investment strategy as an expat:
| Form | Purpose | Deadline |
|---|---|---|
| Form 3520 | Report transactions with foreign trusts | With your tax return |
| Form 3520-A | Annual information return for foreign trust | March 15 |
| FBAR (FinCEN 114) | Report foreign financial accounts over $10,000 | April 15 (auto-extended to October 15) |
| Form 8938 (FATCA) | Report specified foreign financial assets | With your tax return |
Important: A US trust that holds Costa Rican assets is still a US trust for reporting purposes. But if you create a trust under Costa Rican law, it may be classified as a foreign trust with additional reporting obligations and potentially punitive tax treatment.
The Estate Planning Checklist for US Expats in Costa Rica
- US will or revocable trust, covering all US-situs assets
- Costa Rican will, covering all CR-situs assets, drafted by CR attorney
- Coordination review, ensuring both documents reference each other without conflict
- Beneficiary designation audit, covering all IRAs, 401(k)s, life insurance policies
- US durable power of attorney, financial and healthcare
- Costa Rican power of attorney, poder especial for financial and property matters (requires legal residency for full effectiveness)
- Healthcare directive, versions valid in both countries
- Corporate structure review, if property held in S.A. or SRL, confirm share transfer plan
- Annual review, as laws change, family situations change, asset values change
FAQ
Do I need a separate will for Costa Rica?
Yes. A US will does not automatically govern Costa Rican assets. Costa Rica's civil law system has its own succession rules, including forced heirship provisions that protect certain family members. You need a Costa Rican will drafted by a local attorney that complies with Costa Rican formalities. The two wills should explicitly reference each other and clearly divide which assets each governs.
Does Costa Rica have an estate tax?
Costa Rica does not have a traditional estate tax like the US. However, there are transfer taxes and registration fees when property changes hands, and the probate process (sucesión) involves legal and notarial costs. Your US estate tax obligations remain. The US taxes your worldwide estate regardless of where you live or where your assets are located.
Can I disinherit my children from Costa Rican assets?
Not easily. Costa Rica's forced heirship rules give children and surviving spouses protected inheritance rights that can override your will. This is fundamentally different from the US, where you generally can leave your assets to whomever you choose. Your estate plan needs to account for these rules rather than ignore them.
How much does cross-border estate planning cost?
Expect $3,000 to $8,000 for a comprehensive cross-border estate plan that includes coordinated US and Costa Rican wills, powers of attorney in both jurisdictions, and beneficiary designation review. This is more than a domestic US estate plan, but the cost of not doing it, probate in two countries, potential litigation over conflicting documents, is dramatically higher. It's one of the costs that families often overlook when comparing retirement in Costa Rica versus the US.
Should I hold Costa Rican property in a corporation?
It depends on your situation. Holding property in an S.A. or SRL can simplify transfer (you transfer shares rather than real property), but it doesn't eliminate Costa Rican succession law considerations. Corporate ownership also has ongoing compliance requirements under Costa Rica's Registro de Transparencia (beneficial ownership reporting). Discuss the tradeoffs with both your US and Costa Rican advisors.
Brennan Vitali is a CFP® and cross-border financial planner whose family splits time between the US and Costa Rica. Estate planning across borders is one of the most overlooked, and most important, steps in any relocation. Take the Readiness Quiz or book a discovery call.