'Per Stirpes' Overview
"Per stirpes" is a legal term used in estate planning to ensure assets are passed down through generations in a specific manner, particularly when a beneficiary predeceases the grantor. Per stirpes will be applied automatically to your Trust & Will will and you may have seen this phrase in your Last Will & Testament document, "I give my residuary estate in equal shares to my descendants, per stirpes":
Here's what you need to know about this provision and how it affects the distribution of your assets:
What is 'per stirpes'?
Per stirpes, a Latin term, dictates how assets are distributed if a beneficiary dies before the grantor—the person creating the Estate Plan. This designation ensures that if a beneficiary is deceased, their share of the estate is divided equally among their descendants.
The easiest way to think of a per stirpes designation is this: if a Beneficiary dies before you do, and has descendants that survive them, their share of your estate will automatically and evenly go to their child or children.
Example of Per Stirpes Distribution
For example, consider an estate divided equally among three children. If one child predeceases the grantor, leaving two grandchildren, the per stirpes provision divides the deceased child's share equally between the grandchildren. So, each living child retains their third, and the grandchildren split their parent's third, receiving one-sixth each. This maintains equal distribution across family branches.
Why don't I see my children's names listed as beneficiaries in my Last Will & Testament?
The use of per stirpes provisions by Trusts & Will means each child will not be listed by name, as the distribution is treated collectively for all the children. By not listing the names, the estate plan accommodates future descendants, making it flexible and inclusive of all potential heirs. Just ensure that each child is included in the "Children" section of your Estate Plan and specify any exclusions.
Setting Up Beneficiary Lists for Blended Families
For blended families with children from previous marriages, listing all children and step-children as beneficiaries will ensure equal distribution among them, following per stirpes principles. This setup accommodates combined estates and reflects the intent for equal asset division among all children, if you wish.
Does "per stirpes" cover all beneficiary scenarios?
While per stirpes automatically includes descendants of beneficiaries in the distribution, it may not address every scenario, such as the death of a beneficiary before distribution. Specific exclusions or additional provisions might be necessary to cover these situations comprehensively.