Just under half of Americans (46%) have wills that describe what should happen to their assets and wealth after they die. Creating a will is an essential task for any person, but it can be overwhelming and complicated. When you’re first trying to organize your assets, you may come across legal terms that make you pause. Some of these terms may even be similar but have very different meanings. If you’re not careful, you could end up with an estate plan that is the opposite of what you wanted. An outdated phrase such as “per stirpes” can add to the confusion, especially when it is used incorrectly. To reduce your confusion, Gallinger Law will explain the term “per stirpes” below.
What is Per Stirpes?
Per stirpes is a legal term that can be included in a will to explain who will inherit assets if a beneficiary dies before the testator. In a per stirpes distribution, the beneficiary’s estate share is transferred to the beneficiary’s descendants or heirs. While the term per stirpes is often used to refer to a person’s assets under a will, it is also sometimes used to designate beneficiaries in an Individual Retirement Account (IRA).
How Per Stirpes Works
Per stirpes is a Latin term meaning “after a branch”, and it is used to refer to the way wealth is distributed in a family tree. All family members, including children and great-grandchildren, are part of one branch. This concept often appears in wills and annuity accounts to ensure that each branch of the family is treated according to the wishes of the deceased or account holder. If the parents have passed away before the deceased, the children can represent the parents.
Example of Per Stirpes
An example might help to give per stirpes some meaning. Suppose you have three children. Distributing wealth to your children means each child will receive ⅓ on average. This example is straightforward, but what if one of the kids dies before you? If he or she has two children (your grandchildren), then the distribution of each stem will mean that your two living children will still receive ⅓ each, but the remaining ⅓ that was intended for your deceased child will now be assigned to his or her two children, so they end up being ⅙ each. Each branch still gets ⅓, but one of the branches is assigned to both grandchildren. It’s much easier to just say per stirpes than to spell out what happened in each situation.
What Is The Difference Between Per Stirpes And Per Capita?
Per capita and per stirpes are two different types of provisions that you can include in your will. Your wealth distribution may change based on your choices. Per capita and per stirpes only come into play if the beneficiary dies before you the testator. Per stirpes means that the beneficiary’s estate is passed to his or her next heir or heirs. Per capita means that the beneficiary’s estate is distributed equally among all surviving beneficiaries. This means that if one of your beneficiaries dies before you, your estate will only be distributed among your remaining ones equally.
The difference between per stirpes and per capita is very large and you should be especially aware of this if you plan to have more than one beneficiary. These two words are easily confused because they sound similar, but produce two completely different results. When creating or updating your estate plan, be sure to review the specific definitions to ensure you are implementing the intended distribution terms.
Creating A Will With Galinger Law
Creating a will allows you to keep control of your life. It prevents the state of California from deciding who inherits your dearest position. If you are considering services near Los Angeles County, the Inland Empire, and Orange County consider Gallinger Law. We have 17 years of experience with estate planning, business law, nonprofit applications, and immigration services. Call 888-255-9147 to speak with one of our attorneys.