What does per stirpes mean in estate planning?

In estate planning, per stirpes is a distribution provision for assets. This Latin phrase, which literally translates into “by branch” or “by root,” serves an important purpose and comes into play when a listed beneficiary dies before you do. Per stirpes designation dictates who will get the deceased beneficiary’s asset share. 

If you’re curious about what the per stirpes designation means, don’t worry. This guide explains the per stirpes clause, how it works, and what it means for listed beneficiaries.

Per stirpes meaning

Per stirpes is an asset distribution method that specifies how assets will be passed on if a beneficiary predeceases the willmaker or testator. When the per stirpes clause is included in someone's last will, it means that if a named beneficiary dies before them, their share of assets gets passed on to the next generation nearest to the decedent, which could be their children or even grandchildren. 

Quick facts of per stirpes distribution that one should know: 

• Commonly used in last wills and trusts
• The deceased beneficiary’s shares are divided equally amongst their direct, lined descendants, like biological and adopted children
• It doesn’t apply to stepchildren, non-adopted kids, spouses, siblings, relatives, or parents
• It can get difficult to administer in large and blended family set-ups

How per stirpes works

To understand per stirpes, think of a family tree where assets are automatically passed down the tree to the beneficiary's heirs, which could be their children or grandchildren. Each lined descendant gets equal shares. 

This asset distribution method safeguards the heirs of a deceased beneficiary. When a named beneficiary passes away, their inheritance share goes to children rather than a spouse or relative. 

The beauty of the per stirpes model is that it eliminates the need to constantly update your estate plan. The willmaker doesn't have to do anything if a beneficiary dies unexpectedly or if more children are added to the line of descendants. The per stirpes designations preserve the intended inheritance flow without additional paperwork hassles. 

Per stirpes examples

Understand how per stirpes distribution plays out in the real world. 

Example 1: Named beneficiary passes away before parent

Samuel's estate plan divides his wealth evenly between his children, Ginny and Emily, per stirpes. Emily dies before Samuel, leaving behind her own two kids. Emily’s 50% share will automatically be distributed to her two children, with each living beneficiary receiving equal shares. Ginny retains her original portion of Samuel’s property.

Example 2: Named beneficiary and their children die

Robert, who has no spouse or kids, names his three cousins, Jerry, Matt, and Sophia, as primary beneficiaries, per stirpes. Matt has a biological child, Mary. Matt and Mary die in a car accident before Robert. Mary is survived by her biological child, Sandy. One-third of Robert’s assets that were willed to Matt will now pass to Sandy. 

Example 2: Named beneficiary, with no descendants, dies 

In his will, Shawn names his two children, George and Julia, as equal beneficiaries, per stirpes. George, who doesn’t have any kids, dies due to a health condition. In this case, Julia is the person who will inherit George’s share of Shawn’s estate. 

Per stirpes: Pros and cons

If you are contemplating including the descendants per stirpes designation, it’s better to understand its benefits and criticism. 

Pros

The per stirpes distribution method is an attractive estate planning strategy because it: 

1. Maintains family branches. Allows assets to remain within a family chain or bloodline as they pass from the deceased beneficiary to his or her own heirs sans the hassle and costs associated with probate.
2. Simplifies estate planning. It eliminates the need to name a secondary beneficiary or update estate plans every time there’s a change in family structure, such as the birth of a great grandchildren or when one of the beneficiaries dies before you.
3. Protects interest of future generations. Children and heirs of the deceased beneficiary are protected against disinheritance, allowing them to have a safe and secure future. 
4. Reduces conflict. Inclusion of a per stirpes clause ensures a clear predictability about who is next in line to gain estate benefits, reducing confusion and conflict amongst other beneficiaries.
5. Ensures the testator's wishes are followed. The per stirpes model allows the testator's property to be given as per his wishes, even if the family dynamics change, like adopting a child. 

Cons 

Per stirpes distribution have some limitations, such as:  

1. Unequal distribution. If you prefer to distribute your estate evenly, descendants per stirpes might not fulfill that wish. Suppose you use per stirpes to leave property to your son and daughter. Your son has four children, and your daughter only has two. If your son dies first, his inheritance will be divided equally amongst his four kids, with each grandchild getting a 12.5% inheritance. If your daughter dies first, her share will only be divided between her two kids, giving that set of grandchildren a quarter stake each.  
2. Complex in large, blended family setups. Per stirpes distributions can be confusing to track and implement for large families with numerous descendants or multiple generations. 
3. Disinheritance of non-lineal descendants. Non-lineal descendants, like unadopted or stepchildren, can be shut out from receiving an inheritance. The chain of distribution only flows downwards, not sideways. 
4. Assets may get passed on to unintended beneficiaries. The method doesn’t consider the current status of relationships. If you have a following out with a named beneficiary and forget to update your will, your assets can still go into their decedent’s hands in the event of their death. 
5. Administrative burden. In some cases, assets can fall into the hands of minor children. This may require establishing a trust or guardianship that may bring additional administrative and financial burdens.

Per stirpes vs. per capita in a will

Per capita is an alternative way to distribute your estate’s assets. In Latin, per capita means “per head.” In estate planning, per capita implies the distribution of assets goes to the surviving beneficiaries.

Learn how it differs from per stirpes to better understand which method aligns with your estate planning goals. 

Similarities

The similarity between both methods is that they ensure that remaining beneficiaries or living descendants get an equal share of the estate pot.

Differences

With per capita designation, the deceased beneficiary's shares are redistributed equally to the remaining living beneficiaries. It doesn’t automatically trickle down to the deceased’s children as it would with per stirpes.

Let’s look at how the distribution would differ under each method. 

Scenario: Mark names his two children, Judy and John, equal beneficiaries. Judy has three children, and Mark has none. 

Under per stirpes definition, if Judy dies, her share automatically goes to her surviving descendants, her three kids. Her original share is divided equally between the three. However, if Mark uses the per capita clause, Judy’s share will go to John, who is of the same generation, but not the same family branch.

FAQs

How many generations does per stirpes cover?

The per stirpes clause covers as many generations as necessary to fulfill the will. The deceased beneficiary's share will continue to be passed down through their family branch till a living descendent is identified.

How do I include a per stirpes clause in my will? 

To use the per stripes designation in a will, you need to mention the primary beneficiaries' full names followed by the term “per stirpes.” For example, “I leave 25% of my assets to my son, Sam Jackson, per stirpes.” 

There are generic online will templates that might not be tailored to your situation. Suppose you have a blended family structure or simply want to understand the implication of each asset division method. In that case, nothing comes close to seeking professional legal advice. An estate attorney can reduce your confusion while presenting different estate planning options that will ensure your legacy aligns with your intentions. 

Can per stirpes be used for all types of assets?

Per stirpes can be used to pass down real estate and benefits from other financial assets like retirement accounts, life insurance policies, and stock portfolios.

What is better: per stirpes or per capita? 

It comes down to family dynamics, estate planning goals, and the legacy one wants to leave behind. If you wish to create an estate plan that remains valid even if a beneficiary dies before you, then per stirpes distribution is the way to go.