The Difference Between Per Stirpes and Per Capita

Estate planning can be a complex affair. Not everyone leaves behind a specific will stating exactly how they would like their property distributed and who they would like to receive what property. In fact, doing so is not isn’t always possible.

It is often difficult to imagine the variety of possible situations your family members and loved ones could be in when you pass away. Who will have children, jobs, and income, and who will have passed away, gotten married, or moved away?

Given the uncertainty of the future, not everyone feels capable of laying out a specific list of beneficiaries by name. Even if you have, this can change in an instant. You may not have time to make adjustments to your will to account for the death of people who are party to your will or life insurance policy.

What are per stirpes and per capita?

Per stirpes and per capita are two terms commonly used in wills and living trusts to guide the distribution of property. Both terms are a type of general directive that gives an outline for distribution of the estate, with flexibility allowed for circumstantial changes.

In addition, if someone does not leave a will, a state may divide estate assets on either a per stirpes or per capita basis, depending on the laws of that particular state and how it handles the division and distribution of property.

In short, you can designate a primary beneficiary in both circumstances. They approach the circumstance when a beneficiary predeceases the deceased in question differently. Per capita would dictate that in the event of your death, your belongings are distributed equally among any named beneficiaries still alive.

If you use per stirpes, the distribution is still split per child. For example, if you had two children, it would be split 50/50. If there was a deceased beneficiary child, their 50% would be split among their children. The live child would receive the entirety of the other half. Estate planning documents can lay out other specifications as needed.

What Happens with Per Stirpes Property Disposal?

If a will or trust specifies that an estate should be divided under a per stirpes directive, it means that the will maker is specifying a certain hierarchy of division based on the relationships of individuals to the deceased.

In a basic per stirpes division, the method for estate assignment is as follows:

• Beneficiaries who are closest in relation to the deceased person each receive equal shares of the property. If one of those closest relatives is deceased, his or her descendants (if any) will evenly share the part of the property that would have gone to their deceased parent. If that person has no descendants, their share is put back and divided among the remaining closest relatives.

This is a difficult concept to imagine without an illustrative example, but it becomes fairly simple once you grasp the real-life application of it. Imagine the following scenarios, all examples of the per stirpes policy at work:

• Maude has two children, Steven and Joy. Maude passes away, and Steven and Joy are both still living. As her two closest beneficiaries (her children), Steven and Joy will each receive half of her estate.
• Maude passes away, but Steven (the deceased child) also passed away the year before, leaving behind his three children (Maude’s grandchildren). Joy will receive half of Maude’s estate; Steven’s children will equally share the half of the estate that would have been Steven’s, meaning each will receive one third of Steven’s half.
• Maude passes away, but Steven has also passed away the year before. Steven did not have a child. Joy will receive both her share and Steven’s.

This distribution of assets can be altered in different ways based on personal preference. But those preferences have to be specified to treat a deceased heir differently.

What Happens with Per Capita Property Disposal?

Per capita is a much simpler concept than per stirpes. This directive simply states that all members of a specific group will receive equal shares of the estate. What group this is remains up to the estate holder. It does not account for future generations not named by the deceased. Of course, experienced estate planning professionals can help the person writing the will to generate a comprehensive list of heirs as needed. They can also write in more instructions for when beneficiaries predecease them. Sometimes, it’s best to keep it as simple as possible to prevent infighting among beneficiaries and more.

If, for example, you state in your will that you want all of your children and their children to divide the estate, it will be evenly divided among those people. This might seem overly simple. Keep in mind that at the time you write your will, you do not know how many children your children will have had at the time of your passing. So attempting to list beneficiaries by name, or even to state how many there are, is not possible. Nor is it possible to list exactly how much each person should get since you may be unsure of the amount your estate will be worth at that time.

Per capita division allows you to be completely general, stating something as broad as “all of my descendants” to define the capita group. You can also be specific and list a specific group of individuals by name with set assets or amounts you plan to leave them. In these instances, you would also need to specify who the second recipient would be should you have a predeceased beneficiary. The assets can be mingled back into the main estate and divided along with the rest among the others. It can also be redistributed in a specific way based on your distribution plan. Keep in mind that the more complicated it is, the more likely it is to not be executed in the way you want it to be. It’s easier for family dynamic and other factors to get in the way.

Where Should You Go for Help with Estate Planning?

Estate planning can be a complex situation. The key to peace of mind is to ensure that you leave your wishes behind in clear language and concise legal terms. An experienced estate attorney can review your assets with you and help you decide on types of wills, trusts, and more. Legal professionals can help you get ahead of potential for infighting while providing tax perspective and much more.

The methods of property division described above are commonly-accepted and understood ways to dispose of your estate. They are defined by statute and provide a clear rule for distribution that will eliminate ambiguity. It is always best, though, to seek the help of an estate attorney for even basic documents.

Case Studies: Per Stirpes and Per Capita in Estate Planning

Case Study 1: The Smith Family

The Smith family consists of Mr. and Mrs. Smith and their two children, John and Lisa. In their estate planning documents, they specify a per stirpes distribution. Unfortunately, Mr. Smith passes away before Mrs. Smith.

According to the per stirpes directive, the estate will be divided equally among the surviving children. However, since John predeceased Mrs. Smith, his share will be distributed among his children, while Lisa will receive her full share.

Case Study 2: The Johnson Family

The Johnson family has three children: Mark, Sarah, and David. They choose a per capita distribution for their estate. When the time comes, their estate is divided equally among their children, regardless of whether any of them have passed away. If, for example, Mark had already passed away, his share would not be redistributed to his children, but rather remain with Sarah and David.

Case Study 3: The Anderson Family

The Anderson family decides on a per stirpes distribution for their estate. They have three children: Alex, Emily, and James. Unfortunately, both Alex and Emily pass away before the parents. Since Alex has two children and Emily has one, their shares of the estate will be divided among their respective children. James, the surviving child, will receive his full share.