Per Stirpes vs Per Capita
How To Give Your Money and Property To Your Family Through Your Estate Plan
Would you be worried about accidentally excluding one of your favorite family members from receiving their inheritance when creating your Will or Living Trust?
Or, maybe there is a person in your family that you wouldn’t want to receive an inheritance…
Would you be worried about accidentally including them?
Both scenarios are possible if you don’t choose the right way to distribute your estate (money, property, and assets) when creating your Will or Living Trust.
Deciding between Per Stirpes vs Per Capita distribution is central to making sure your estate is properly handed down to your loved ones after you pass away.
As a result, you need to make the right choice if you want your Estate Plan to work the way you intend.
If you’re unsure about the difference between the two distribution methods, you’re not alone.
Often times the choice between Per Stirpes vs Per Capita can be confusing, but this article has some useful information and resources that can help.
So what’s the difference between a Per Stirpes distribution and a Per Capita distribution?
Let’s start with Per Stirpes…
What Is A Per Stirpes Distribution?
In a Per Stirpes distribution, your beneficiaries with the closest relation to you (your children for example) get an equal share of your estate when you pass away.
Let’s say you have 2 kids – each kid gets half of your estate.
But what if one of your beneficiaries dies before you?
If one of your beneficiaries dies before you, his or her descendants (your grandchildren for example) will equally share the portion of your estate that would have gone to their deceased parent.
If that person didn’t have any descendants, their share is divided evenly among your remaining beneficiaries.
Examples always help when it comes to understand a Per Stirpes distribution.
The following 3 scenarios are all examples of how a Per Stirpes distribution would work…
Per Stirpes Scenario 1:
Kathy has two children, Mike and Amy.
Kathy passes away – Mike and Amy are both still alive.
As her two closest beneficiaries, Mike and Amy will each get half of Kathy’s estate.
Per Stirpes Scenario 2:
Kathy has two children, Mike and Amy.
Kathy passes away, but her son Mike passed away the year before her.
Mike left behind 3 children (Kathy’s grandchildren).
Amy will receive half of Kathy’s estate.
But what happens to Mike’s portion since he is deceased?
Mike’s children will equally share the half of the estate that would have gone to Mike.
In other words, Mike’s 3 children will each receive ⅓ of Mike’s half.
Per Stirpes Scenario 3:
Kathy has two children, Mike and Amy.
Kathy passes away, but her son Mike passed away the year before her. Mike had no children.
Amy will receive both her share and Mike’s share. In other words, Amy will receive 100% of Kathy’s estate.
What Is A Per Capita Distribution?
A Per Capita distribution differs from Per Stirpes.
In a Per Capita distribution, your property is divided equally among all of your surviving descendants.
You, as the estate owner, can name each beneficiary individually, or specify which group of your descendants (children, grandchildren, or both for example) will receive your assets.
For example, if you specify that you want all of your children and grandchildren to split your estate, it will be distributed evenly among all of those people.
If any of those beneficiaries are deceased at the time of your passing, their share is divided amongst your beneficiaries that are still living.
This sounds simple, but keep in mind that at the time you specify your wishes, you may not know how many children or grandchildren you will have when you die.
For this reason, it may not be possible to list your beneficiaries by name.
It may also be difficult to specify exactly how much each person should receive since you may be unsure of how many people the estate will be split between and how much your estate will be worth.
Per Stirpes or Per Capita - Which Is Better?
Both methods are commonly accepted ways of distributing your assets to your beneficiaries.
It’s your personal preference as to who you want to receive your assets when you die.
As a result, there is no right or wrong answer when choosing between Per Stirpes vs Per Capita.
If you’re having trouble deciding which distribution method is right for you, it’s usually best to talk with an Estate Planning Attorney.
Estate Planning Attorneys help families with decisions like this everyday and they can help you craft a plan that is unique to your situation.
Over the past decade at Rochester Law Center, we’ve helped 1,000s of clients with all matters of Estate Planning, Wills, Living Trusts, and Probate.
We’d like to invite you to set up a free initial consultation with an experienced Estate Planning Attorney.
Call us today at (248) 613-0007.
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