When used in a will, trust, or retirement account, per stirpes is a Latin term that means by branch. It describes how your assets are divided and distributed in the event that a beneficiary passes away before the testator (the person who wrote the will).
Following per stirpes distribution, if one of your beneficiaries should die before you do, their share of the inheritance will be passed on to their beneficiaries. Essentially, each branch of the family tree receives its designated share of your assets.
How does per stirpes differ from per capita?
Unlike per stirpes, which distributes assets by the branch of the family, per capita (by head) distributes assets by person. If one beneficiary dies before the testator, their share of the assets will be redistributed among the surviving beneficiaries in the same generation.
Example:
Jon and Elizabeth have four living daughters. The two oldest daughters are married, and each has two children. The two youngest daughters are unmarried.
If Jon and Elizabeth chose a per stirpes distribution for their assets, each of their four daughters would receive a fourth of the couple’s assets. If one of their daughters predeceases the couple, that daughter’s share would go to her beneficiaries. For the married daughters, this would be their children. Spouses are not considered in a per stirpes distribution. If one of Jon and Elizabeth’s children had no descendants, their share of your assets would be redistributed among the other three daughters.
If Jon and Elizabeth chose a per capita distribution and one of their daughters predeceases the couple, her share of the inheritance would revert to the estate and be redistributed among the surviving beneficiaries in the same generation.
Jon and Elizabeth’s grandchildren would not inherit unless they were explicitly designated as beneficiaries or all four daughters were already deceased.
What are the benefits of a per stirpes distribution?
A per stirpes distribution means that each branch of your family receives its share of the assets specified in your will. It provides a means to cover as many generations as necessary to carry out your will.
If one of your beneficiaries should die before you, a per stirpes distribution allows their share of your assets to go to their children and grandchildren, or even great-grandchildren. A per stirpes designation can save time when writing your will. You will not need to update your will for the births and deaths of beneficiaries and their offspring.
A per stirpes distribution allows you to divide your assets among family branches. This linear approach to distributing your assets may reduce family conflict as it is clear how the assets will be distributed.
What are the drawbacks to a per stirpes distribution?
If you look past your children to your grandchildren, a per stirpes distribution can result in an uneven distribution of your assets. For example, suppose you have three children. The oldest has four children, the middle child has two, and the youngest has one child. Assets distributed to the oldest child are distributed among her four children, while assets distributed to the middle child are divided in half between her two children, and assets distributed to the youngest child pass to her lone offspring.
While spouses are not considered in a per stirpes distribution, they may end up managing some of your assets for a minor child. Suppose one of your children predeceases you, and you die while your grandchildren are minors. Your deceased child’s spouse could end up managing your assets for their children.
Per stirpes distributions don’t include stepchildren who have not been legally adopted into your family. This is because they are not lineal descendants. To include stepchildren in your will, you will need to name them specifically if you want them to inherit if a beneficiary predeceases you.
Final Thoughts
A per stirpes distribution uses a linear approach to distribute your assets. Assets are kept in specified branches of the family. However, using this distribution can trigger an unequal distribution of your assets among your grandchildren and succeeding generations.
Per capita distribution gives you more control, but you may have to update your will when new children are born into the family, or a beneficiary predeceases you.
Writing a will can be stressful, as testators try to determine which estate planning distribution strategy is fairest in their family situation. Talk to an estate attorney at Katzner Law Group to learn more about your distribution options and the benefits and drawbacks of each option.
You can schedule a call with us or reach out to us directly at 855.528.9637 to learn more about how best to plan today to protect those most important to you.