Categories: Banking Law and Financing
The Costa Rican Commerce Code is one of the most evolved regulations in our Civil Law. For this reason, trade in Costa Rica has received a large amount of foreign investment through contracts equivalent to its foreign versions in other legal systems. A clear example is the trust, which shares the structure and objectives of a USA trust fund. One of the different types of the testamentary Trust that the Commercial Code describes is the testamentary trust/probate trust , which is usually recommended for estate planning. Therefore, it is important to understand the probate trust, its benefit for those who can achieve it.
What is the Probate Trust?
The Probate Trust will exist when a person transfers the fiduciary property of certain assets and goods to a third party, who is obligated to exercise it for the benefit of whom is designated as a beneficiary in the same trust. That designated person must comply with the statutes and deadlines filed by the trustor.
The testamentary trust option is more than recommended for those who have investments such as equity, participation in companies and cash deposits, which make the amount of assets increase, and if it is considered that potential heirs don’t have the necessary skills necessary to administer or direct the assets and the invested capital.
Parties of the Probate Trust
The settlor (testator): The testator disposes of his patrimony in a free and conscious way, being necessary for him to have the capacity of enjoyment and exercise.
The fiduciary (executor): The fiduciary is the one who executes the last will of the trustor (testator) after his death, being in this case, an individual or a fiduciary institution (corporation) with capacity to receive in trust. This guarantees that the execution of the trust is made by an institution with experience, technical capacity, moral solvency and permanent duration.
The trustee (heir): Is the person who is entitled to receive the benefits of the testamentary trust.
Probate Execution Procedure
Once the testamentary trust is constituted, at the death of the trustor, the execution of the trusteeoccurs. The fiduciary institution has the responsibility to ensure:
1. That the person holding the trust position is an institution of recognized solvency.
2. The permanence and continuity of the fiduciary work, since the companies have practically unlimited life.
3. That the work of the trustee is carried out by specialized institutions.
4. That the testamentary trust is executed for the benefit of a person, the heir trustee.
If you need assistance with a Testamentary Trust in Costa Rica, at ERP Lawyers & Associates we can assist you with useful legal advice. We are more than willing to help you with this important contract, which ensures the distribution and administration of your assets as available, and everything related to testamentary trusts. You can contact us through our website or by phone and we will gladly assist you.
