When you make a last will and testament, you must decide how to distribute your estate to your loved ones through beneficiary designations. At first glance, this seems straightforward. But you also have to consider how to distribute your estate if there is a deceased beneficiary and you do not have the opportunity to change your will before your death.
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You can accomplish this by designating an alternate beneficiary to receive the share if the primary beneficiary predeceases you. Or if the beneficiary passes before you, you can give the beneficiary’s share to the beneficiary’s descendants.
You can leave property to your beneficiaries “per stirpes” or “per capita.” But what do per stirpes and per capita mean when it comes to your named beneficiaries, and how does it distribute assets in probate court?
What Is Per Stirpes? Per Capita?
Before we fully define these terms, it is helpful to lay out a simple fact scenario and then define and apply the legal terms to demonstrate how these designations work and how they affect the distribution of your estate.
Example:
The testator (will maker) is a single male:
- The testator has three children, A, B, and C.
- A has two children (A1 and A2), B has two children (B1), and C has one child (C1). A1, A2, B1, and C1 are Testator’s grandchildren.
- There are no great-grandchildren.
A dies before the Testator, leaving two children (Testator’s grandchildren, A1 and A2).
At the time of Testator’s death, he has two surviving children, B and C, and four surviving grandchildren, A1, A2, B1, and C1.
Per Stirpes Distribution
Let us look at per stirpes first. This Latin term means “by branch” or “by roots.” Some consider this an old-fashioned and outdated term, so you may also see “by right of representation,” which has the same meaning and application. What per stirpes means is the right of children to inherit, in place of their deceased parent, the share their parent would have inherited were they alive. Each branch of the family remains intact, and the deceased parent’s share is distributed equally to the deceased parent’s children.
In this scenario, the estate would be distributed in three branches representing the three children. Since one child predeceased the Testator, that child’s one-third share is divided among that child’s children (Testator’s grandchildren).
The per stirpes language would look like the following:
- All of my residual estate to my children, A, B, and C, per stirpes.
- All of my residual estate to my children, A, B, and C, by right of representation.
The residual estate would be distributed evenly between A, B, and C if they all survived the testator. But since A died before the Testator and has two surviving children, this is how the estate would be distributed to the beneficiaries:
- The estate would still be distributed to the three branches representing the three children, A, B, and C.
- Since A has passed, A’s one-third share is equally distributed to A’s children, A1 and A2.
The result is that B would receive a one-third share, C would receive a one-third share, and A’s children would receive A’s one-third share of the residual estate. Since A had two children, they would equally split the one-third share between them, leaving each with a one-sixth share of the residual estate.
Per Capita Distribution
Per Capita is also a Latin term that means “per head.” Each surviving “head” of the designated class receives one share of the estate. Only surviving beneficiaries in the class specified (i.e., children) receive the distribution under the will. If the class identified is children, then only the surviving children will be beneficiaries under that will.
Let us consider per capita distribution by applying children as a class and separately with descendants as a class to demonstrate the differences in distribution.
Per Capita Distribution With Children as Class
The will language would look something like this:
- All of my residual estate to my children, A, B, and C, per capita.
Again, if A predeceases the testator, under the per capita children distribution, there are only two surviving children, B and C. The entire residual estate goes to B and C, who will each receive one-half share of the residual estate.
Per Capita Distribution With Descendants as Class
Let us look at per capita distribution with descendants as the named class for distribution:
- All of my residual estate to my descendants, per capita.
This distribution means that all surviving descendants would get equal shares of the residual estate. Descendants include children, grandchildren, and great-grandchildren. So, in this case, all surviving children, B and C, and all surviving children of A, B, and C (grandchildren) would get equal shares. Here, there are two surviving children and four surviving grandchildren, and each would receive one-sixth of the residual estate.
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How Parents Choose Between Per Stirpes and Per Capita
Sometimes, a testator has a genuine desire to ensure that the estate or certain estate property is distributed in equal shares per branch so that if a child predeceases the testator, that child’s shares go to that child’s children (the testator’s grandchildren). Indeed, this per stirpes distribution is a common way to designate distributions in a will.
However, there are times when a testator does not want grandchildren to receive a deceased child’s share of distribution and prefers a per capita distribution to living children only. This distribution may occur when the testator does not want grandchildren involved in the ownership of the testator’s home because of the potential complications and strife that might occur when surviving children and some grandchildren own the home and have to decide and work together to maintain, sell, or otherwise manage the property. In this case, the testator may want to exclude the distribution of the home to grandchildren and utilize per capita distribution only to his living children.
Because the distributions are vastly different under right of representation or per stirpes vs. capita, it is important to understand the differences and make intentional decisions about how you want your estate distributed. If you have a complicated distribution structure you may want to consult an experienced estate planning attorney. However, if you can create your own simple will and other estate planning documents.
