I keep hearing a version of the same question on discovery calls. Someone sits down with a US estate attorney, funds a revocable trust for the house, the brokerage accounts, the business interest. Then they start thinking about a place in Costa Rica. And they ask, in the middle of the conversation, almost as a side thought: "if I move, will that trust still work?"
Short answer: the trust still works. For your US assets. It does not reach across the border on its own.
The core insight
A US revocable trust is a US legal instrument. Costa Rica does not recognize it the way a US probate court does. If you title a Costa Rica house in the name of your Delaware or Florida revocable trust, the Costa Rica land registry (Registro Nacional) will look at the paperwork and say, in effect, we do not know what this is.
You need a Costa Rica structure for Costa Rica property. And you need both documents talking to each other so nothing falls between them.
What a US revocable trust actually does
For the assets it holds title to inside the US, a revocable trust does three things:
- Avoids probate at your death, so heirs get the assets without the court process.
- Lets a successor trustee step in if you become incapacitated, without a court-appointed guardian.
- Keeps the terms private, unlike a will, which becomes a public court document.
Every one of those benefits is a US legal benefit. Probate courts, incapacity petitions, public will filings, all of that is US machinery. Costa Rica has its own machinery, and it does not read your US trust document.
Tax laws may change, and estate rules are one of the areas that shifts most; treat the specifics in this post as a starting point, not the final word.
What happens if you title Costa Rica property in a US trust
People try this. A US attorney drafts the trust, the client goes to close on a house near Playa Flamingo or Jaco, and someone raises the idea of putting the property in the trust for continuity.
Here is what tends to happen:
- The Costa Rica notary (a notary here is a lawyer with special authority, not the US version) will usually refuse to record it that way, because the Registro Nacional does not accept the US trust as a valid owner type.
- If it does get recorded, transferring the property later, on death or during your life, becomes a legal knot. Costa Rica succession law, the sucesorio process, applies to property located here, and it does not care what your US trust says about who gets it.
- Your family ends up hiring a Costa Rica lawyer to open a succession case in Costa Rica anyway. The trust did not save them anything on this asset.
The trust did not fail. It was not built for this.
How cross-border expats typically structure it
There is no single right answer, but the pattern I see most often for people with US and Costa Rica assets looks something like this:
- The US revocable trust holds US real estate, US brokerage and bank accounts, and interests in US business entities.
- Costa Rica real estate is held either directly by the individual, or, more commonly, through a Costa Rica corporate entity. Two options exist: the Sociedad Anónima (S.A.) and the Sociedad de Responsabilidad Limitada (S.R.L.). For US tax purposes, an S.A. is a per se corporation, which means it gets treated as a foreign corporation on your US return whether you like it or not. An S.R.L. defaults to a partnership or disregarded entity, which is usually simpler for a US owner.
- The Costa Rica entity's shares or quotas are then held inside the US trust, or the ownership is coordinated with the trust through a pour-over provision.
- A separate Costa Rica will covers the Costa Rica assets under Costa Rica law.
That last piece surprises people. Yes, you may need a will in each country. They should not contradict each other, which is where cross-border coordination matters.
The tax layer nobody warns you about
Structuring alone does not solve the tax picture. A few things to know:
- If you own a foreign corporation (an S.A., for example), you likely have annual US filing obligations that many people miss. Form 5471 is the main one, and the penalty for failing to file starts at $10,000 per form per year, per IRS instructions.
- If your aggregate foreign financial accounts, including any Costa Rica bank account tied to the entity, cross $10,000 at any point in the year, you file an FBAR. The non-willful penalty for 2026 is $16,536 per violation, per Treasury's inflation adjustment; willful penalties reach $165,353 or 50 percent of the account balance.
- The US taxes citizens and green card holders on worldwide income no matter where you live. Estate tax also applies to worldwide assets. So your Costa Rica property counts toward your US estate for federal estate tax purposes, even though Costa Rica does not itself impose a federal estate tax on it.
Tax laws change; verify current thresholds and penalty amounts with a qualified professional before you rely on them.
Who this structure works for, who it does not
It tends to work for people who:
- Actually own or plan to own Costa Rica real estate, not just visit.
- Have US assets substantial enough that the estate planning cost is proportional. Below a certain net worth the layered structure can cost more in maintenance than it saves.
- Are willing to run a Costa Rica corporate entity with its resident agent, annual fees, and (if it holds property) municipal reporting.
It tends not to make sense for people who:
- Are renting long-term with no plan to buy.
- Want a Costa Rica bank account and nothing else. Bank accounts here do not require residency, and holding a personal account rarely justifies a separate entity.
- Are still in the exploration phase. Setting up a Costa Rica corporate structure before you have decided where you want to be usually leads to unwinding it later.
Common mistakes I see
- Assuming the US revocable trust "just works" abroad. It does not, and the client discovers this at a Costa Rica closing table.
- Choosing an S.A. by default because the local attorney recommends it, without asking a US CPA how the entity will be treated on the US return. An S.A. can create surprise Form 5471 and PFIC exposure.
- Naming a US-only trustee who has no ability to act on Costa Rica assets. Successor trustees for the US trust and directors or agents for the Costa Rica entity should be coordinated, ideally with someone reachable in each country.
- Failing to update the US trust's schedule of assets when a Costa Rica property is added. Even if the property itself is held through a Costa Rica entity, the ownership of that entity should show up somewhere in your US documents.
- Skipping the Costa Rica will entirely, on the theory that the entity handles it. If you die owning shares of a Costa Rica S.R.L. and there is no will covering them, your heirs open a succession case here anyway.
What to do next
If you already have a US revocable trust and you are thinking about Costa Rica, three practical steps before any structure gets built:
- Read your current trust. Look for language that talks about foreign property or non-US assets. Most standard trusts either say nothing or say something unhelpful.
- Get clear on the actual plan. Rental for a year? Buying a house? Splitting time? The structure that fits a two-year exploratory phase is not the structure that fits a permanent move.
- Have a cross-border conversation before, not after, you sign anything on a Costa Rica property. The extra 30 days upfront saves years of untangling later.
If it helps to talk through where you are in that process, that is exactly what my diagnostic session is built for. It is not a sales pitch for a full plan. It is a review of what you have and what actually needs attention now versus later.
This post is educational and does not constitute personalized investment, tax, or legal advice. Vitality Wealth Planning, LLC is a registered investment adviser. Tax laws change; verify current rules with a qualified professional.