Special to A.M. Costa Rica With so many people, ranging from the common property thief to the tax man, trying to take your property away from you, why not fight back and protect yourself with legal fences to keep the bad guys out. Here are a few ways: Corporations or limited partnerships, called SRLs in this country, can be created to hold property and protect assets. These two entities protect possessions from personal torts and accidents which can create liability for an individual but can not be transferred to the corporation for enforcement. Corporations and SRLs are also easily sold because only the stock needs to be signed over to a new purchaser, thus saving some thousands of dollars in transfer taxes. Mortgage Certificates better known as Cédulas Hipotecarias in Costa Rica can be registered over real property. These certificates are very similar to bank CDs. In case the owner or holder needs a loan, the certificate can be endorsed over to a creditor as collateral. The documents can save time and money because the normal appraisals and paperwork to borrow money are avoided. Once the loan is paid, the endorsement is canceled. More importantly, these certificates can protect property because once created they are in first place and no other liability can take precedence. These certificates can be especially useful and provide an extra margin of safety for commercial property. Family equity or patrimonio familiar is a great way to protect property in the name of a person, if that person is married or has children in Costa Rica. No one can ever take the asset away from the person or his family, not even the tax man. There are some restrictions to using this legal protection, and it can only be placed on one piece of property which has a house on a lot of no more than a 1,000 square meters. Despite the limitations, it is well worth consideration if your home is one of your only worldly goods. Usufruct or usufructo in Spanish can be used as rights of survivorship to guarantee succession of property to a loved one. Normally, when a |
person dies and no recognized will exists, one needs to go through probate. This process can take years and be expensive in Costa Rica and should be avoided at all costs. To avoid probate some people decide to transfer property while they are still alive with the risk the beneficiaries will throw them out and sell the assets. Transferring the property and keeping the usufruct, the right of use, you can never be tossed out, not even in a tax foreclosure or any other type of legal action. When the holder of the usufruct dies, the lien is automatically cancelled and the right of use moves on to the beneficiary, saving thousands of dollars in legal fees and taxes. A more complex use of this legal strategy can be set up as a sophisticated tax shelter. A company losing money can give the usufruct right to another in a high tax bracket. The second firm can deduct the losses against its profits. Usually this arrangement is made between family members or close business partners who can be trusted. It is perfectly legal. There are many ways to protect yourself and your assets in Costa Rica. Finding a competent adviser, legal and tax professional is a must. NOTE: Lic. Allan Garro, provided much of the research in preparing this article. He can be reached at law@licgarro.com. Garland M. Baker is a local businessman who provides business services to the international community. He may be reached at info@crexpertise.com. Mr. Baker has undertaken the research leading to his series of articles in conjunction with A.M. Costa Rica. Thanks to Am Costa Rica for these ongoing excellent News Articles.
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