Understanding Per Stirpes vs Per CapitaDecember 8, 2020
Difference Between Per Stirpes vs Per Capita Distribution in a Will
Estate planning is not always an easy topic to discuss, but it’s important to ensure that you have your end of life wishes documented to remove the burden from your loved ones. Part of estate planning is creating a Last Will and Testament (Will) and determining the distribution of assets to your heirs.
There are two different distribution approaches that can be used when writing your Will – the terms to describe these approaches are Per Stirpes vs Per Capita.
Knowing the distinctions between per stirpes vs per capita and how the assets are distributed under each, can help you make educated decisions regarding your beneficiary designations.
What Does Per Stirpes Mean?
A Per Stirpes beneficiary designation can stretch across generations and gives each living beneficiary an equal share. Per stirpes is Latin for “by class” or “by representation.” Under this designation, if you were to name your children as your beneficiaries and one child would precede you in death, their portion would go to their children.
What Does Per Capita Mean?
Per capita distribution means all beneficiaries receive an equal share of the asset. The meaning of per capita is “by head.” If one of the named persons precedes you in death, their share would be equally distributed amongst the other named beneficiaries and not to the deceased beneficiary’s children like under per stirpes.
Per Stirpes vs Per Capita Examples
To give an example of each distribution, say you have three children named Sarah, Michael and Derek. Sarah has two children: Sam and Anna, who have no children of their own yet. Michael has one child, Eric, and Derek does not have any children.
Per Stirpes Example: In your Will, it states that your assets are to be distributed to your living descendants, per stirpes. If all three of your children are still living, your assets will be distributed to them equally, so Sarah, Michael and Derek will all receive 1/3 share of the estate. However, if Michael precedes you in death, his 1/3 share will go to Eric, his son.
The same would be true if Sarah precedes you in death. Her 1/3 share would go to Sam and Anna equally, and they would each get 1/6 of the estate. If Derek should precede you in death, Sarah and Michael would each get ½ of your assets since Derek did not have any living children to pass his share to.
Per Capita Example: In your Will, it states to distribute your assets to your living descendants, per capita, and all three of your children are living. Each child would receive 1/3 of the estate. If Sarah precedes you in death, her portion would be given to Michael and Derek equally, so they would then each receive ½ of the distribution and Sam and Anna, Sarah’s children, would not receive anything under the per capita designation. If both Sarah and Michael precede you in death, Derek would receive the entire distribution of the assets in your estate.
Per stirpes tends to be used more frequently than per capita because it tends to follow a more traditional approach, but every scenario is different. There are valid reasons why you may wish to have specifically named members in your Will receive your assets.
Importance of Hiring an Estate Planning Attorney
Hiring a knowledgeable estate planning attorney to assist you with your estate planning and help navigate the legalities, such as per stirpes or per capita distribution, is a necessity. Specific scenarios can get complicated and having a trusted attorney that understands the specifications of estate law ensures your wishes for your beneficiaries are in alignment with your estate planning documents.
Having the experienced estate planning attorneys at Daley Zucker on your side will ease the stress of estate planning and help guide you in making the right decisions for your planning documents. Contact Daley Zucker today for a free consultation or to learn more about per capita vs per stirpes in a Will!