If you are creating a will or trust, you may be coming across many unfamiliar Latin terms, such as per stirpes. It is important that you understand this term and its alternatives when you are creating your estate plan to ensure that your property goes to the beneficiaries you intended to receive it. This concept largely affects what happens when a beneficiary predeceases you. Below, we provide all of the essential information about per stirpes, define what per stirpes means, and explain how per stirpes work in a real-world context.
Per Stirpes Definition
Per stirpes is a Latin phrase that literally means “by branch” or “by roots.” This term is sometimes used in a last will and testament to say what happens to a beneficiary’s share if the beneficiary passes away before the testator, the person who created the will. Per stirpes is a legal term that describes how the testator’s assets are divided and distributed. It refers to every descendant down a branch of a family tree. See the illustration below.
With a per stirpes distribution, the beneficiary’s share passes to the beneficiary’s descendants or heirs. When you provide for a per stirpes distribution, you are saying that if a beneficiary passes away before you do, the beneficiary’s heirs are entitled to the decedent’s share. Generally, this means that if you leave property to a beneficiary with a per stirpes designation, the beneficiary’s children will receive the property if the beneficiary dies before you do.
How Per Stirpes Works
To understand how per stirpes works, it’s important to realize what would happen without a per stirpes clause or similar designation. Without a per stirpes, if a beneficiary predeceases you, the probate court would have to look to the other clauses in your last will and testament to see what should happen to your property. If you did not name a contingent beneficiary, the property might be included in the residue of your estate and pass according to your residuary clause.
Per stirpes basically puts a contingency in place in case a beneficiary passes away before you do to avoid the possible confusion about what to do with the beneficiary’s share of the estate if they predecesae the testator. The answer is to give the share to their children to split equally. In a per stirpes designation, the court looks down that branch of the family tree to find the next lineal descendant (child, grandchild, great grandchild, etc.). The relative or relatives closest to the deceased person receives the property. If there are multiple descendants that are related by the same degree, they split the share equally.
Per stirpes does not affect the shares of other beneficiaries; it is only concerned with what happens to the share of a beneficiary who predeceases the testator. Therefore, the other shares would be inherited as originally indicated in the will and would be unaffected by the per stirpes designation.
Per Stirpes Example
The simplest example of per stirpes is saying that you want all of your property to be inherited to your children, but then to their children if your child predeceases you. Let’s look at an example.
Adam is the testator. He writes his last will and testament, giving away his estate valued at $1 million to his children to share equally. He has three children: Bo, Charles, and Diana. Bo has two children, Edward and Fiona.
If Adam passes away before his beneficiaries, this is how his estate would be divided:
As you can see, each of his children would receive one-third share of the estate. If Adam included a per stirpes designation in his last will and testament and his son Bo predeceased him, the new distribution of the estate would look like this:
Charles’ and Diana’s shares are not affected by the per stirpes designation or their brother’s death. They still each receive one third of the estate. However, Edward and Fiona step into their father’s shoes and inherit his share, so they each receive one-sixth of the entire estate (half of one-third each). If Edward or Fiona had children, their children would not inherit anything because per stirpes goes to the nearest relative on the same branch of the family tree, in this case, Edward and Fiona. Each branch of the tree receives a one-third share.
What Is the Opposite of Per Stirpes?
Per capita is another Latin term that is sometimes used in this context and generally has the opposite meaning of per stirpes. Per capita means “by the heads” and usually means that surviving descendants in the same generation nearest you inherit equal shares. In the example above, Charles and Diana would stand to inherit one-half of the estate each with this designation.
Per capita can also include multiple generations. For example, if the testator provided a per capita distribution to all of his children and grandchildren, each family member would receive an equal share. Going back to the example above, this would mean that Bo, Charles, Diana, Edward, and Fiona would each inherit one-fifth of the estate, or $200,000 in this example. If one or more of the family members predeceased Adam, their share would be absorbed by the surviving children and grandchildren.
You can get a more in-depth analysis of the differences between per stirpes and per capita in our article. You can also speak to an estate planning attorney for a technical definition of per stirpes and whether this arrangement will best accomplish your estate planning objectives.
Benefits of Per Stirpes Beneficiary Designations
Using a per stirpes beneficiary designation is an effective strategy to create a clear estate plan and backup plan in case a beneficiary predeceases you. It avoids the hassle of having to update your estate planning documents in case of death. This designation also ensures that the children or descendants of your beneficiary get to receive the inheritance they likely would have benefited from had the original beneficiary survived.
Drawbacks of Per Stirpes Beneficiary Designations
While per stirpes can offer a convenient way to create a contingency plan, this designation is not appropriate in all cases. For example, if you only have a few beneficiaries, you may prefer to single out what should happen to the share instead of automatically passing it down the family tree. You might prefer your living children to split the share instead of giving it to your grandchildren. Or, you might prefer for one grandchild who has a stronger relationship with you or better financial skills to inherit instead of splitting it with their less mature siblings. Also, if there are no descendants, the same confusion can result which would have occurred without this designation in the first place.
Per Stirpes FAQs
Here are some of the FAQs estate planning attorneys and law firms receive about per stirpes:
Why Should I Care About Per Stirpes or Per Capita?
Per stirpes and per capita sound similar, but they have opposite meanings. If you use the wrong term in your will, the potential impact could be significant. The person you intended to benefit from your will might get nothing, and someone you did not want to inherit may inherit. Additionally, your other beneficiaries’ shares may be diluted.
What Assets Does Per Stirpes Affect?
In addition to affecting arrangements in your estate planning documents like your will or trust, per stirpes can also affect who inherits other property, such as:
- Real property
- Money in a bank account
- Individual Retirement Accounts (IRA).
- Personal property
- Other property
How Many Generations Does Per Stirpes Refer To?
The number of generations that per stirpes involves depends on the specific situation. The inquiry into finding a surviving relative continues down the same branch of the family tree until a surviving relative is identified. In many cases, this may involve only one generation. Or, there may be no surviving descendant. In other situations, this may involve multiple generations, going down the line of a beneficiary’s living children, grandchildren, great-grandchildren, great great grandchildren, etc. In this sense, per stirpes covers as many generations as necessary to find a living relative to distribute the assets to.
What If There Are No Descendants?
If a beneficiary predeceased the testator and they had no descendants, the probate court would turn to other terms of the will to determine who would stand to inherit the remaining share. There may be a contingent beneficiary designation. Or, there may be a residuary clause on the matter. If there is no pertinent clause, that property may be distributed as though the testator died intestate.
Is Using a Per Stirpes Designation a Good Idea?
Whether per stirpes is a good idea depends on your specific situation and your estate planning objectives. On one hand, per stirpes is an effective way to protect your loved ones and keep an inheritance in the same family. On the other hand, it may not provide your desired outcome.
Making this determination often involves analyzing your specific situation and family composition. You can speak to an estate planning law firm to determine if per stirpes is a good idea for you.
Are There Alternatives to Per Stirpes?
Yes. Per capita (discussed previously) is one major alternative to per stirpes. That arrangement might be right for you if you want your beneficiaries to inherit equally from you or you want to avoid potential conflicts that could arise if your beneficiaries receive different shares of your estate.
You could also establish clear contingent beneficiaries in your last will and testament. For example, you may choose to name your friend Kurt to inherit. If Kurt predeceases you, you could name his wife Julie to inherit instead. If Julie and Kurt both die in a tragic car accident, you could name someone else completely unrelated to them to inherit.
You could also consider creating a trust. With a trust, you can provide distributions to your loved ones according to your objectives. This may mean your beneficiaries receive a share of their inheritance once they reach a certain age or milestone. Or, it could mean that the trustee you name only makes payments to third parties on their behalf. You could even give the trustee discretionary power to determine when to make distributions. This arrangement would help avoid the concern about shares in your estate plan and instead focus on the outcomes you want the inheritance to provide.
Takeaway
Per stirpes is a designation that allows living children to inherit the inheritance of their deceased parent. However, there are other options to establish contingencies in your estate plan. Carefully consider your objectives before determining which type of contingency arrangement to complete.