Here is a question worth sitting with for a moment. If you drew a map of everything you own — the accounts, the property, the entities, the pension, the insurance — how many countries would appear on it?
For most successful people the honest answer is one. Occasionally one and a half.
Quick answer: Diversifying across stocks, bonds, sectors and currencies does nothing about jurisdictional risk if every one of those positions sits inside a single legal and political system. That is a concentrated position — it just does not appear on any statement.
What is jurisdictional concentration risk?
It is the exposure you carry to decisions made by one government: tax law, capital controls, currency policy, reporting rules, litigation environment, estate treatment. These are not market risks. They cannot be hedged with an index fund, and they do not show up in a standard risk report. But they are correlated across your entire balance sheet in a way that no individual holding is.
The classic illustration: a portfolio diversified across forty countries, held entirely through domestic accounts, subject to one estate regime and one set of capital controls. Diversified investments. Concentrated jurisdiction.
Where does the exposure usually sit?
- Real property. The least portable asset you own, and often the largest. It is subject entirely to local law.
- Retirement accounts. Tax-advantaged, and therefore tightly bound by the rules that granted the advantage. Those rules are amendable.
- Operating entities. Where your company is incorporated determines a great deal about what happens to it in a bad scenario.
- Estate structure. Wills, trusts and titling that work perfectly at home may be recognised only partially — or not at all — elsewhere.
- Your legal right to be somewhere. Rarely counted as an asset until it is the only one that matters.
What does diversification look like in practice?
It is less exotic than the phrase suggests. Typically it means a second residency that is real and maintained, a banking relationship in that second jurisdiction, some portion of hard assets held there, and a local will covering local assets so your heirs do not inherit a court process.
Costa Rica appeals here for structural rather than glamorous reasons. Foreigners hold property on the same legal footing as citizens — a genuinely uncommon feature. Taxation is territorial, so foreign-sourced income is outside the local net. There is no inheritance tax, though succession does run through a formal court or notarial process. Property tax is 0.25% annually, transfer tax 1.5%, and total closing costs typically 4–5.5%.
How much is enough?
There is no correct percentage, and anyone quoting one is guessing. A more useful test: if your home jurisdiction imposed something genuinely disruptive tomorrow — exchange controls, a wealth tax, a sharp estate change — what fraction of your net worth and how many of your options would be unaffected? If the answer is close to zero, that is the finding.
How to actually audit your exposure
The exercise takes an afternoon and most people find it uncomfortable, which is generally a sign it was worth doing. List every asset over some threshold you care about — property, accounts, retirement plans, business interests, insurance policies, vehicles, art. Against each, write four things: which country legal system governs it, which country would tax a disposal, which country courts would handle a dispute, and how long it would take to convert to cash you could access from abroad.
Then count the distinct countries in each column. For most people the answer is one, one, one, and never thought about it.
The last column is the one that surprises people. Assets that feel liquid are often only liquid domestically. A brokerage account that can be traded in seconds may still take weeks to move internationally, and a property that would sell in a month in normal conditions may not sell at all in the conditions that made you want to sell it.
The sequencing that works
Families who do this well tend to follow a similar order, and the order matters because each step makes the next easier.
Residency first, because it is the slowest to obtain and unlocks everything else. Banking second, once you have status and a local tax identity — opening accounts as a non-resident foreigner has become materially harder across most jurisdictions. Property third, after you have spent enough time to know where you actually want to be. Estate documents fourth, once there is something local to bequeath. And ongoing compliance running throughout, because the reporting obligations begin as soon as the first account opens.
People who invert this — buying property first, then discovering the residency route they assumed was available does not fit their circumstances — create expensive problems that were entirely avoidable.
A note on what this does not protect against
Jurisdictional diversification addresses country-specific risk. It does nothing about market risk, currency risk in isolation, or your own decision-making, and it is not a substitute for insurance or for adequate liquidity. It also introduces new exposures of its own: unfamiliar legal systems, advisers you know less well, and a compliance burden that grows with every jurisdiction added.
The correct mental model is not that a second jurisdiction is safer than the first. It is that holding two uncorrelated jurisdictional exposures is more robust than holding one, in the same way a two-legged stool beats a one-legged one — while a twelve-legged stool is mostly just difficult to carry.
Frequently asked
Is this about hiding assets?
No, and it is worth being unambiguous. Everything discussed here is fully reportable and should be fully reported. US persons have FBAR and FATCA obligations on foreign accounts. Diversification is about where assets sit, not whether authorities know about them.
Does owning foreign property alone diversify me?
Partially. Property held abroad but with no residency, no local banking and no local estate documents leaves you dependent on a legal system you have no standing in. The pieces work together or not very well at all.
What is the smallest sensible first step?
Usually a residency application, because it is the slowest to obtain and the one that unlocks the others. Banking and titling get considerably easier once you hold status.
How much of my net worth should sit abroad?
There is no defensible universal figure, and anyone offering one is guessing. A more useful framing is functional: enough that a disruptive change at home would leave you with meaningful assets and real options, which for most families lands somewhere well short of half.
Does a foreign bank account create reporting obligations?
For US persons, yes — FBAR applies above certain aggregate thresholds and FATCA reporting applies separately. Other countries have their own regimes. These are informational filings in most cases, but penalties for missing them are severe relative to the effort of making them.
Is real estate a good diversifier?
It diversifies jurisdiction well and liquidity poorly. Property is the least portable asset available, which is exactly why it should be paired with a residency and local banking rather than held in isolation.
Where to go from here
If any of this is landing close to home, the useful next step is not a brochure — it is a conversation about your actual numbers, your timeline and your family situation. Our team at Golden Visa Costa Rica walks through residency routes, property options and the practical sequencing with people in exactly this position every week. Book a private consultation and we will tell you honestly whether Costa Rica fits — or whether it does not.
This article is for general information only and is not legal, immigration, tax or investment advice. Rules change and individual circumstances differ; consult a qualified Costa Rican attorney and your own tax adviser before acting.