Key Takeaways
- Distributes assets by family branches.
- Deceased beneficiary's share passes to descendants.
- Prevents unintentional disinheritance across generations.
- Used in wills, trusts, and beneficiary designations.
What is Per Stirpes?
Per stirpes is a Latin term meaning "by branch," used in estate planning to distribute assets so that each branch of a family inherits equally. This method ensures that if a beneficiary predeceases the testator, their share passes directly to their descendants rather than being divided among surviving beneficiaries.
It commonly applies to wills, trusts, and named beneficiary designations, preserving the testator's intent across generations.
Key Characteristics
Per stirpes distribution has distinct features that ensure fair asset division among family branches:
- Branch-based inheritance: Assets pass down family lines, protecting grandchildren and further descendants.
- Automatic adjustments: The estate divides shares among descendants if a primary beneficiary is deceased, without needing updates to legal documents.
- Applies broadly: Used in wills, trusts like an A/B trust, retirement accounts, and life insurance policies.
- Prevents disinheritance: Ensures equitable treatment of all family branches regardless of generational gaps.
How It Works
Per stirpes divides an estate into equal portions at the first generation level, such as the testator's children. If a beneficiary is deceased, that beneficiary’s share is split equally among their descendants, continuing down family branches as necessary.
This method simplifies estate management by automatically adapting to family changes, which reduces disputes and aligns with the testator’s wishes. It contrasts with other distribution methods that may exclude descendants, making per stirpes a popular choice for protecting long-term family interests.
Examples and Use Cases
Understanding per stirpes is easier with real-world scenarios highlighting its application:
- Airlines: Companies like Delta and American Airlines often provide employee benefits with named beneficiaries, where per stirpes ensures benefits pass to descendants properly.
- Family trusts: In an A/B trust, per stirpes distribution can dictate how assets flow between spouses and children after death.
- Dividend investing: If you hold dividend stocks, understanding estate planning with per stirpes can ensure your heirs receive income streams fairly; consider exploring best dividend stocks as part of your portfolio.
Important Considerations
While per stirpes protects family branches, it may not suit all situations, especially blended families where stepchildren are excluded. Explicitly stating per stirpes in your will or trust is crucial, as some states default to other methods.
Consulting with an estate attorney can clarify how per stirpes interacts with other tools like a safe deposit box or a rabbi trust to ensure your estate plan aligns with your goals and legal requirements.
Final Words
Per stirpes ensures your assets pass down family branches fairly, protecting descendants' shares even if a beneficiary predeceases you. Review your estate documents to confirm this distribution method aligns with your intentions and update beneficiary designations accordingly.
Frequently Asked Questions
Per Stirpes is a Latin term meaning 'by branch' used to distribute an estate so that each family branch receives an equal share. If a beneficiary dies before the testator, their share passes down to their descendants, ensuring the estate is divided fairly across generations.
The estate is divided equally at the first generation, such as among children. If a beneficiary in that generation is deceased, their portion is split equally among their descendants, like grandchildren, continuing down the family line as needed.
Per Stirpes preserves the testator’s intent by maintaining shares for each family branch, helps simplify estate planning for large families, and reduces disputes by automatically covering multiple generations until living descendants receive their inheritance.
Per Stirpes passes a deceased beneficiary's share to their descendants, preserving family branches, while Per Capita divides the estate equally among surviving beneficiaries at a certain generation, potentially excluding descendants of deceased beneficiaries.
Per Stirpes is best suited for biological or legally adopted descendants to protect family lines. It generally excludes stepchildren and spouses, so it may not fit blended families or situations where equal shares among survivors are preferred.
Avoid Per Stirpes if you want to distribute assets equally only among surviving beneficiaries or if you have a blended family that includes stepchildren. Also, if you prefer naming specific contingent beneficiaries outside the family line, this method might not be ideal.
Yes, Per Stirpes automatically adjusts the distribution if a beneficiary dies before the testator, passing their share down to their descendants without needing to update the will or trust.
Yes, consulting an estate attorney is recommended, especially for complex families or when state laws default to Per Capita or Per Stirpes. Clear, explicit language in your estate documents is essential to ensure your wishes are followed.
