One of the challenges when trying to navigate the labyrinthine world of estate planning is grappling with the often dense and confusing legal jargon. One such term, "per stirpes," can seem particularly daunting at first, yet it's a fundamental concept in this area of law. Don't worry though. We'll break it down into simple, easy-to-understand terms.
What Does "Per Stirpes" Mean?
"Per stirpes" is a Latin term that translates to "by branch" or "by class" in English. In the context of estate planning, per stirpes is a legal term used to describe a specific method for distributing an individual's estate or assets after their death.
To put it in the simplest terms, per stirpes means that if a beneficiary predeceases the individual whose estate is being distributed (the decedent), the beneficiary's share will be divided equally among his or her own children. This ensures that the decedent's assets remain within the original branches or lines of the family tree.
Per Stirpes: An Illustrative Example
Consider this: John has two children, Alice and Bob. John's will states that his estate should be distributed per stirpes.
If Alice and Bob are both alive when John passes away, they each get half of John's estate. But let's say Alice dies before John, leaving behind two children of her own, Susan and James. In this situation, Bob would still receive his half of John's estate, but Alice's half wouldn't go to Bob. Instead, it would be split equally between Susan and James, Alice's children. Hence, they would each receive a quarter of John's estate.
Per Stirpes versus Per Capita
A concept that often gets confused with per stirpes is "per capita," which is Latin for "by head." With a per capita distribution, if a beneficiary predeceases the decedent, their share does not go to their heirs, but is instead evenly divided among the remaining beneficiaries.
Using our previous example, if John's will stated distribution per capita and Alice predeceased John, her share wouldn't go to Susan and James. Instead, Bob would receive the entire estate.
Per Stirpes versus Pro Rata
In addition to per stirpes and per capita, there's another term often used in estate planning: "pro rata." This Latin term, meaning "in proportion," represents a different method of distribution, and it's crucial to understand its differences from per stirpes distribution.
Pro Rata: An Explanation
In a pro rata distribution, the estate is divided equally among the surviving beneficiaries, without particular consideration for familial branches. Here, the deceased person's estate is distributed based on the proportion of surviving beneficiaries, unlike per stirpes, where each branch of the family is treated separately and independently.
Pro Rata: An Illustrative Example
Let's go back to our example of John, Alice, and Bob, with Alice having two children, Susan and James. With a pro rata distribution and Alice predeceasing John, Alice's share wouldn't go to Susan and James. Instead, Bob would inherit the entire estate. This is different from per stirpes, where Susan and James would have shared Alice's portion.
Why Is Per Stirpes Important?
Per stirpes distribution can be beneficial in protecting the inheritance rights of grandchildren and ensuring a more equal distribution among descendants, especially in cases where a beneficiary predeceases the decedent. It helps ensure that a decedent's wishes to benefit not only their immediate children, but also their lineal descendants, are honored.
Navigating the complexities of estate planning can seem like trying to find your way out of a maze, but understanding the critical terms can make the process significantly less daunting. With the per stirpes concept, you can plan with a clear understanding of how your assets will be distributed down the branches of your family tree, ensuring that your descendants are provided for according to your wishes. As always, consulting a knowledgeable estate planning attorney is crucial to correctly apply these principles and ensure that your estate planning goals are accomplished.
To find out how Stouffer Legal can help guide you through the estate planning process, you can click here to view our online Estate Planning, Asset Protection and Elder Law workshop
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