What Do the Terms Per Stirpes and Per Capita Mean in Estate Planning?
Estate planning documents often contain terminology with special legal meaning. Two examples of terms that may appear in a last will and testament or a trust are per stirpes and per capita. Both terms relate to how estate property is distributed in the event a beneficiary named in a will or trust predeceases the testator (for a will) or grantor (for a trust).
Estate Distribution Per Stirpes
Per stirpes is a Latin term that translates literally to “by branch.” Providing in a will or trust that a beneficiary receives a distribution per stirpes means that the descendants of the beneficiary receive the inheritance if the beneficiary is deceased when the will or trust is effective. The result is that each “family branch” receives their share of the distribution, which ensures that descendants of deceased beneficiaries receive the beneficiary’s inheritance.
Using per stirpes distribution is the most common approach in estate planning. It prevents the unintentional disinheritance of grandchildren and ensures fairness among the family members, when a testator or grantor wishes to provide for equitable distribution of an estate across all family branches. Per stirpes distribution may simplify estate planning, reduce conflicts among potential heirs, and automatically adjust the estate plan to some changes in the family structure.
Estate Distribution Per Capita
Per capita is a Latin term that translates to “by the head” or “by person.” A distribution per capita in an estate plan provides that the estate is divided among the living (surviving) beneficiaries when the will or trust becomes effective. A deceased beneficiary’s share is divided among the surviving beneficiaries. Descendants of a predeceased beneficiary receive nothing.
While per capita may seem like a more straightforward distribution method, it may not be fair to all beneficiaries, especially if some have more descendants than others.
Difference Between Per Stirpes and Per Capita Distribution
A basic example illustrates the difference in the effect of per stirpes and per capita distributions: Mary is a widow with three adult children. She creates a will leaving her estate equally to all three of her children. If one of the children passes away before Mary dies, and she used a per stirpes distribution, the estate would be divided in three equal amounts among the two living children and the descendant(s) of the deceased adult child. On the other hand, if Mary used a per capita distribution, her estate would be divided equally in two shares between the two living adult children, and descendants of the deceased adult child would receive nothing.
This simplified example shows the dramatic difference in result of per stirpes and per capita estate distributions. In more complex family situations, the results can be considerably more complicated, especially if there are adopted children, step-children, or children from multiple marriages involved. For that reason, an estate planning attorney customarily drafts language that not only specifies whether distribution is per stirpes or per capita, but includes additional provisions in the will or trust to make the distribution intentions of the testator or grantor extremely clear. Without that clarification, there may be conflicting interpretations by family members, which can lead to costly and time-consuming legal disputes.
While the use of per stirpes and per capita in a will or trust, together with clarifying language, can safeguard the integrity of the estate distribution provisions in the event of the death of a beneficiary, updating an estate plan to address key changes in family structure is always strongly recommended. If a primary beneficiary in your will or trust passes away, you should talk with your estate planning lawyer about making revisions in your estate planning documents to address the change in circumstances, even if your will or trust refers to per stirpes or per capita distribution.
Importance of Using an Estate Planning Attorney
Deciding whether your estate planning goals are better served by a per stirpes or per capita distribution and ensuring that the legal language in your will or trust is very clear about distribution of your estate are among the important reasons that you should get assistance from an experienced estate planning attorney when you create your estate plan.
Getting assistance from a knowledgeable estate planning attorney accomplishes much more than ensuring that your estate planning documents accurately reflect your intentions for distribution of your estate in the event a beneficiary predeceases you. Your lawyer also makes certain that you avoid common estate planning mistakes that can have significant adverse consequences for you and your loved ones.
A complete estate plan protects your assets and your loved ones, and also protects you during your life. With a thoughtfully structured and drafted estate plan, you fulfill a wide range of critical goals and gain the peace of mind that you have done everything necessary for the future security and well-being of yourself and your family.
Talk With an Experienced Georgia Estate Planning Attorney
Our Cartersville estate planning practice at Asset Protection & Elder Law of Georgia focuses on helping clients determine their estate planning goals and using the best approach to address all their concerns relating to their well-being, assets, families, and estates. We serve clients throughout the communities northwest of Atlanta, including in Bartow County, Cobb County, Cherokee County, Gordon County, Floyd County, and Paulding County. To schedule a consultation, call us at (770) 382-0984 or contact us through our online form.