Per Stirpes - Explained
What is Per Stirpes?
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What is Per Stirpes?
Per stirpes refers to an approach where the share of a predeceased beneficiary gets transferred to his heirs or grandchildren. Usually, this term is used at the time of making a will of a person. However, sometimes, it can also be related to a persons retirement accounts.
How Does Per Stirpes Distribution Work?
The term per stirpes is derived from the Latin language meaning by roots or by branch. It talks about each individual mentioned in a family tree starting from another individual. For instance, every family member related to a mother such as her kids and kids kids will be a part of a branch. Per stirpes is considered at the time of creating wills and allocating funds in the retirement accounts so as to make asset allocation easier and fairer. This ensures that every branch of a family tree gets considered as per the account holders or testators preferences. When a parent dies prior to the decedent, kids can act as representatives of their parents. Per stirpes doesn't include spouses at the time of allocation.
Difference between per stirpes and per capita
Per capita, also known as share and share alike refers to by the heads. The alive descendants, being in the same generation closest to the testator, receive the equal share of property and assets. The property owner includes names of each person who should be receiving the share, or identifies which group should be getting the assets. It can either be the children of property owners children, or grandchildren, or even both. The portion of the expired person, instead of being kept separately, is combined with the property or estate, and allocated among recipients. For instance, Meg mentions in her will that her property will be allocated on per capita basis among her kids: Abby, Stephanie, and Scott. Scott further has two kids named Cora and Max. So, in case, Abby dies, her share will be included in the other assets of Meg, and will be distributed equally among Stephanie and Scott. And, Cora and Max, Megs grandchildren, wont receive anything.
Real World Example
There is a widower named Tom having three kids: Debbie, Al, and Paul. Debbie has two kids named Sarah and Dennis. Debbie expires. Now, if the will of Tom allocates his assets equally among his issue per stirpes, but doesn't signify about how issue per stirpes would pertain to the allocation, all the children and grandchildren of Tom who are alive would receive a portion of his estate. In case, he mentions issue per stirpes, it means only the succeeding generation will receive a portion after his death. So, both his children Al and Paul would receive rd of share, while his grandchildren Sarah and Dennis would receive the of estate. In case, Al also dies before Tom, Paul would receive half and Sarah and Dennis would receive the of the Toms assets.
- Succession Planning
- Chartered Trust and Estate Planner
- Cy Pres Doctrine
- Exordium Clause
- Non-Contestability (No Contest) Clause
- Per Stirpes
- Elective Share
Qualified Domestic Relations Order (QDRO)
- Declaration of Trust
- Uniform Gifts for Minors Act
- Acceptance of Office by Trustee
- Beneficial Interest
- Asset Protection Trust
- Bare Trust
- Blind Trust
- Charitable Lead Trust
- Charitable Remainder Trust
- Charitable Remainder Annuity Trust
- Charitable Gift Annuity
- Credit Shelter Trust
- Discretionary Trust
- Generation Skipping Trust
- Grantor Trust Rules
- Living Trust
- Inter Vivos Trust
- Revocable Trust
- Irrevocable Trust
- Irrevocable Income-Only Trust
- Qualified Domestic Trust (QDOT)
- Qualified Terminal Interest Protection Trust (QTIP)
- ABLE Account
- Accumulated Income Payments (Canada)
- Charitable Split-Dollar Insurance Plan
- Coverdell Education Savings Account