What Is Per Stirpes?

When you're creating a will, one of the most important steps is to decide who will inherit your estate. To ensure that your gifts are distributed fairly, even if one of your beneficiaries passes away before you do, you can use a method called "per stirpes." 

What Does Per Stirpes Mean?

Per stirpes is a Latin term that means "by branch" or "by roots." In practice, it's a legal concept that's used in estate planning to determine how an inheritance is distributed if your beneficiary dies before you. It's also possible to use per stirpes when designating a life insurance beneficiary. You might also see per stirpes called "right of representation" or "by representation," depending on the state.

In keeping with the Latin meaning, the per stirpes method distributes wealth based on a branch structure. When you're writing a will, you can direct your belongings and property to pass to your children, per stirpes. That means if one of your children precedes you in death, their share would go to that child's heirs — their branch of the family tree.

How Does Per Stirpes Work?

Imagine that you have four children. In your will, you state that each child will receive $25,000, per stirpes. Your oldest child dies before you, leaving three grandchildren.

Upon your death, your three living children will each receive their $25,000 share. The deceased child's $25,000 share would be split equally among their three children, giving each one $8,333.

In some cases, you might choose to leave the entirety of your estate to your children, rather than a specific dollar amount. You would then designate that your estate would be split equally among your children, per stirpes.

In the example above, your three living children would each receive one-quarter of the estate. Your three grandchildren would split the remaining quarter, leaving them each with one-twelfth of the estate.

What's the Difference Between Per Stirpes and Per Capita?

Per capita is another way to distribute your wealth, but it's slightly different from per stirpes. If you choose the per capita method for estate planning, your wealth would be distributed equally among all living beneficiaries.

Let's say you leave a $100,000 estate to your four children, per capita, and your oldest child dies before you do. Under the per capita method, that child's $25,000 share returns to the estate, instead of passing to the grandchildren. That means that your three living children would each inherit $33,333. Unlike the per stirpes scenario, your deceased oldest child's three children would not inherit anything.

You can designate multiple generations in your will. Let's say you designate that your estate is split equally among your four children and five grandchildren. If everyone is still living at the time of your death, each person will receive one-ninth of the estate. If your oldest child predeceases you, the remaining children and grandchildren will each receive one-eighth of the estate.

Per Stirpes and Per Capita at Each Generation

Per stirpes can present complications — usually, this happens when more than one of your children die before you do. Let's say you have four children. The oldest has four children, the second has one child, the third has no children and the youngest has two children. Your will leaves your estate to the four children, per stirpes.

If your oldest and youngest child pass away before you, your wealth will be split unequally among your grandchildren. 

• Oldest child (deceased): The one-quarter share will be split four ways among their children, giving each one-sixteenth of the estate. 
  
  
• Child 2: One-quarter share
  
  
• Child 3: One-quarter share
  
  
• Youngest child (deceased): The one-quarter share will be split two ways, leaving their two children with one-eighth of the estate each.

To avoid this situation, you can state in the will that your estate should be distributed per capita at each generation. With this designation, the shares of any deceased beneficiary are returned to the estate; then, they're divided equally among the children of the deceased beneficiaries. In the example above, both of your deceased children's one-quarter shares would be returned to the estate and split equally among their six children.

• Oldest child (deceased): The four surviving grandchildren would each receive a one-sixth share.
  
  
• Child 2: One-quarter share
  
  
• Child 3: One-quarter share
  
  
• Youngest child (deceased): The two surviving grandchildren would each receive a one-sixth share.

It's important to note that the per capita at each generation designation only benefits grandchildren whose parents have passed. If one of your children is still living, and they receive their share of the estate, their children don't inherit anything.

Modern Per Stirpes

If you want to ensure that your wealth is divided equally among grandchildren in case all of your children precede you in death, you can use modern per stirpes, which is also called per capita with representation or American per stirpes.

This designation works like per stirpes. However, the division of the estate happens in the first generation with surviving members. So if all your children pass away before you do, the division would happen at the third generation — your grandchildren. Each grandchild would then be entitled to an equal share of the estate. If a grandchild is deceased, their share would be split equally among their children.

What Happens Without Per Stirpes or Per Capita?

If your will doesn't designate how your wealth should be distributed, or if you don't have a will, your state will make the decision on your behalf. Each state has its own rules; some use per stirpes, some use modern per stirpes and a minority use per capita at each generation.

For maximum control, it's always a good idea to be explicit about how your estate should be divided. That way, you can ensure that your legacy is carried out according to your wishes.