When a loved one has passed away and has assets located in Costa Rica you may find yourself looking for legal advice on the probate process in Costa Rica. The first question most of you ask me is how much does it cost to open probate in Costa Rica?.
The overall cost of a probate proceeding is dependent on the value of the estate that is being probated. As such, the greater the value of the estate the more that probate will cost. The law in Costa Rica by way of Executive Decree 36562-JP (Arancel de Honorarios Por Servicios Profesionales de Abogacía y Notariado) sets the minimum fee that an Attorney can charge for opening a probate process.
In Costa Rica you have two types of probate proceedings that can be opened. The first one is a judicial probate process before a Costa Rican court with proper jurisdiction. The second one is a Notary Probate Process which is started before a Costa Rican Notary Public. This option is governed by Article 129 of the Notary Code which delegates authority to the Notary Public to handle certain types of probate cases. Keep in mind that in Costa Rica you must be a licensed Attorney in order to also be a Notary Public. Therefore, the fee schedule that applies for probate proceedings is the same for a judicial or a notary probate process and is based on the following fee schedule.
1. Up to 15,000,000 Colones (approx. US$26,000) = 10%
2. On the excess of 15,000,000 (US$26,000) to 75,000,000 (US$131,500) = 7.5%
3. On the excess of 75,000,000 (US$131,500) = 5% Source Article 16 & 28 of Executive Decree 36562-JP (Arancel de Honorarios Por Servicios Profesionales de Abogacía y Notariado). Article 137 Notary Code and Article 940 and 951 Code of Civil Procedure.
The legal fee calculation to open a probate process is based on the gross value of the assets of the estate.
A Sample Calculation If we assume an estate worth US$ 200,000 then the Attorney/Notary Fee calculation to open a probate process would look as follows:
Gross Value of the Estate $200,000 On the first $26,000 10% $2,600 The next $105,500 7.5% $7,913 On the remainder $68,500 5% $3,425 Total Attorney/Notary Fee is $13,938
To determine the value of the assets of the estate which can include real estate, shares of stock, cars, boats, artwork, jewelry and business interests to name few requires naming an appraiser to determine the value of those assets.
Depending on the type of asset to be appraised the amounts that appraisers charge in Costa Rican are generally based on a fee schedule established by the Costa Rican Judicial Court System. The court sets the accepted fees that appraisers and experts may charge when presenting their findings to the court. A modification to the Code of Civil Procedure currently pending implementation until September of 2018 will allow the substitution of an appraisal when the property, vehicles or other registered goods have an assigned tax valuation done in the preceding 2 years. In the meantime an appraisal is still required and those fees can range anywhere from 1% to 4% for an official court appraiser.
These fees are also dictated by law. In Costa Rica Article 557 of the Code of Civil Procedure indicates that the executor shall be paid the fee established by the testator. However, in most cases that fee is not mentioned in the will. When that happens the executor is authorized by law to charge the estate for services rendered based on the following schedule:
On the first 10,000 Colones (US$18) = 5% then 2.5% on the amount that exceeds 10,000 Colones. This is based on the “liquid capital of the estate”.
Costa Rica does not have a direct inheritance tax. However, the government does charge a 1.5% asset transfer tax to transfer real estate and 2.5% to transfer a vehicle from one person or entity to another. To record any transfer of real estate or movable goods such as cars or boats the recording office will also charge a recording fee and the Notary Public that prepares the deeds will also charge a fee. So expect another 3.5 % of the value of the real estate and 4.5% on the value of vehicles to transfer it out of the name of the deceased and into the name of an heir of the estate.
The cost of probate in Costa Rica quickly adds up and can be an expensive proposition. Right? What can you do to minimize the financial impact? Review your estate plan with your Attorney and plan out what you can do now to reduce the impact of probate on your estate.