Per Stirpes
The Latin term per stirpes is commonly used in estate planning to describe how a person making a will would like his assets to be distributed. In case a family beneficiary dies before the will’s owner, a per stirpes distribution means that person’s portion of the assets go directly to that beneficiary’s heirs. There are other options if the will’s owner (called a “testator”) does not want his assets to be distributed this way. To explore this concept, consider the following per stirpes definition.
Definition of Per Stirpes
Pronounced
Per-stir-peez
Adjective/Adverb
- By familial stocks, or by each branch of a family
- By equal shares to a deceased person’s beneficiaries
Origin
1675-1685 Latin per stirpes (literally: by stocks)
Per Stirpes in Estate Planning
When making out a will, the testator should consider where he wants his assets to go should a named beneficiary die before him. It is common for that deceased beneficiary’s inheritance to go to his or her children, which is a per stirpes distribution. The testator has the ability to specify how such an inheritance will be distributed in this situation. For instance, rather than being distributed to the deceased beneficiary’s children, the he might specify that the inheritance goes back into the pot, to be shared equally among the original remaining beneficiaries.
Example of Per Stirpes Distribution
George, who has carefully managed his finances all of his life, is making out a will for the distribution of his $1.5 million estate after his death. George specifies that his wife, if she is still living upon his death, will get 50% of his assets, and the remaining estate will be divided equally among their four adult children, named in the will as Donald, Arthur, Samantha, and Edward, per stirpes.
Ten years later, when George passes away, his wife inherits $800,000, and the remaining $700,000 is supposed to be divided among the adult children. Unfortunately, the couple’s son, Donald, had been killed in an auto accident about a year prior to George’s death. Because George made a per stirpes distribution, Donald’s share is divided equally among his children.
Example of Non-Per Stirpes Distribution
If, on the other hand, George had specified that his estate would be divided among his children per capita, which means “for each person,” Donald’s portion of the estate would not flow down to his children. Instead, his portion would remain part of the assets left to George’s children. This entire amount would then be evenly divided among the three living children. Arthur, Samantha, and Edward would inherit about $233,000 each, instead of the $175,000 they would have received had Donald still lived.
Use of Per Stirpes Language in Modern Wills
When making out a will, the testator has the right to give away his assets in any way he chooses. He can name specific people or organizations, to receive all or a portion of his assets. He is free to determine where those same assets will go should one of those beneficiaries be deceased, or otherwise unable to receive the assets, when the will goes into effect. The most common line of distribution is per stirpes, as it just makes sense that a deceased beneficiary’s family receive the money intended for him or her.
This can become a complex issue, making it a good idea to consult with an estate planning attorney, who can prepare a will and other estate planning documents, ensuring the estate goes to the right beneficiaries with the least amount of confusion. Many legal professionals are moving away from old fashioned terms, like per stirpes, and per capita, because they can be confusing, or even misused. It is not required that any person use complicated language or Latin terms in their will. Simple, clear language specifying which assets should be given to which people is perfectly legal.
To ensure that those assets are distributed according to the testator’s desires, it is important to include alternative plans, should one of the original beneficiaries be unable to receive his inheritance. This normally happens by death of a beneficiary, but the testator may also choose to withhold assets if a beneficiary does not meet some specific test. For instance, if an adult child beneficiary fails to attend college, which is a requirement specified in the will, the testator may specify that his inheritance go to someone else.
Examples of Per Stirpes Distribution
- Roger has three children, Nathan, Emilia, and Alice. Roger passes away, and all three of his children are still living. Because of his per stirpes distribution in Roger’s will, each of his children will receive one-third of his estate. Of Roger’s $3 million estate, Nathan, Emilia, and Alice will each receive $1 million.
- Roger has three children, Nathan, Emilia, and Alice. Roger passes away, but his daughter, Alice had passed away a year before, leaving behind two children (Roger’s grandchildren). Nathan and Emilia will each receive one-third of Roger’s estate, and Alice’s children will each receive one-half of Alice’s share. Of Roger’s $3 million estate, Nathan and Emilia will each receive $1 million, and Alice’s children will each receive $500,000.
- Roger has three children, Nathan, Emilia, and Alice. Roger passes away, but his daughter, Alice had passed away a year before. Alice had no children. Alice’s share will remain in the pot, to be divided equally between Nathan and Emilia. This means that Nathan and Emilia will each receive one-half of Roger’s estate. Of Roger’s $3 million estate, Nathan and Emilia will each receive $1.5 million.
Related Legal Terms and Issues
- Assets – Property or finances owned by an individual or entity, and regarded as having value.
- Beneficiary – A person designated as the recipient of money or other assets under a will, trust, insurance policy, etc.
- Estate Planning – The process of arranging, during one’s life, for the disposition of his assets upon his death.
- Heir – A person who, by right of inheritance, inherits the assets of a deceased person.
- Will – A legal document in which a person specifies who should receive his assets upon his death.
