Understanding Your Will: What Does "Per Stirpes"?
Estate planning is filled with exotic-sounding Latin-based terms like "per stirpes" that can be a bit intimidating. But it's important to understand what they mean when you're making a will or creating a living trust.
What Per Stirpes Means
Per stirpes translates loosely to "my roots" in Latin. It refers to your beneficiaries. They take from your estate by right of representation, which means that they'll inherit in a share equal to that of the individual they're representing. The term is commonly applied to grandchildren. It might appear in your will as something like, "I leave XYZ to my then living descendants, per stirpes."
Here's how it works: Whatever bequest a parent would have been entitled to receive from your estate moves to her children if she predeceases you. If you have two children, each of them might receive a one-half share of your estate. Your grandchildren will receive nothing -- at least while their parents are living. But if one of your children should predecease you, her one-half share would pass in its entirety to her children.
If she is the parent of three of your grandchildren, each of those grandchildren would receive 1/3 of her 1/2 share of your estate, or 1/6. Your other child would still receive his one-half share and your deceased child's one-half share would be divided equally among her three children. One-half divided by three equals 1/6 of your overall estate, so that's what each these three grandchildren would receive.
Per Stirpes vs. Per Capita Distributions
Contrast this to "per capita," which translates loosely to "by headcount." You might see this presented in your will or trust as something like, "I leave XYZ to my then living descendants, per capita."
If you have two children and five grandchildren who survive you, all would receive a 1/7 share of your estate in a per capita distribution because there are seven of them. If one of your children predeceases you, each of the others would receive a 1/6 share because now there are only six of them. Her share effectively returns to your estate; it doesn't pass to her descendants. The right of representation becomes moot because your grandchildren are already receiving a share.
If You Die Without a Will
These terms are not just important in your last will and testament or living trust agreement. If you should die without an estate plan in place, your property will pass to your heirs according to your state's rules for intestate succession. In other words, your state's laws would determine who gets what of your property and assets. Your state's code will provide that your closest living relatives will inherit from you either by a per stirpes distribution system or a per capita distribution system.
It varies from state to state.
It is a very good reason to create an estate plan if you haven't already done so, particularly if you're not in agreement with the way your state will automatically distribute your estate and you have a large family. Your will or living trust agreement effectively supersedes these state laws.
Even if you're unmarried and have only one child and no grandchildren, state law will intercede at your death if you don't have an estate plan in place. If your child predeceases you, your estate will likely pass to more distant relatives, some of whom you might not have wanted to inherit from you. In a worst-case scenario, it's possible that your estate could "escheat" to the state if you leave no living relatives. It is the case regardless of whether your state defaults to a per capita or per stirpes distribution system.
Your estate planning attorney can help you review your options to determine what best suits your concerns.