In a will or trust that states your intentions for how your property will be distributed upon your death, if you intend to leave your assets to an intended group – such as your grandchildren – you will be asked whether you want to make that distribution in a per capita manner or per stirpes? You likely have not heard either of these phrases and will need a detailed explanation of how each works.
Per Capita Distribution
If your will states that all of your children are to receive equal shares per capita this means that if any of your children precedes you in death, then that share will be lumped back in and distributed to your other named children.
Per Stirpes Distribution
In contrast, a will that states all of your children are to receive equal shares per stirpes uses a generational approach. If one of your children precedes you in death, then that child’s share will pass to the person’s children (your grandchildren) in equal parts.
Example
For example, you have 3 children A, B and C and each of your adult children have two children giving you a total of 6 grandchildren. If your will distributes all of your assets equally to A, B, and C per capita, but C passes away in a car accident prior to your death, then all of your assets go equally to A and B. One day A and B will leave the remaining of these assets to their children. This essentially means that the two grandchildren who lost their parent in a car accident never receive any of your assets. Their other four cousins eventually benefit, but not them.
Now, let’s look at how changing the distribution language in your will to per stirpes plays out in this same situation. Your assets will then be distributed 1/3 to A, 1/3 to B and 1/3 in equal parts to C’s two children.
In the situation above, the family dynamics are pretty straight forward, but you can see how complicated this can be for blended families with stepchildren and the like. During your estate planning process, your attorney can illustrate the various ways distribution can play out among your intended beneficiaries. Thinking through this decision is very important so that you can ensure your assets end up distributed the way you truly want that to happen. To get started, contact the estate planning attorneys at Stouffer Legal in the Greater Baltimore area. You can schedule an appointment by calling us at (443) 470-3599 or emailing us at office@stoufferlegal.com.
