Per Stirpes vs. Per Capita

There are two ways to leave your estate The estate is all the property that you have in your possession at any point in time. This includes real, personal and intangible property. When you die this property will be taxed by the state with what are called estate taxes. You can avoid these taxes through the use of a living trust. to your children; Per Stirpes and Per Capita. Per Stirpes means that the Grantor This is the person that puts his/her property into the trust to avoid estate taxes and probate. intends that the Beneficiary's share of the inheritance will go to his or her heir.  Per Capita indicates that the Grantor intends that NO ONE except the named beneficiary receive that share of the estate.

If there are two or more primary beneficiaries These are the people who will receive money from the trust. Beneficiaries can be the Grantors, Trustees, friends, family, or charities which the Grantor has decided to name as beneficiaries in the trust. and each has children, it is important to specify in the will whether the children of each prime beneficiary are simply to take their parent's share, divided equally among the children of that particular parent, or whether all of the children of all of the deceased prime beneficiaries are to share equally in the combined shares of their deceased parents.

Reviewing examples helps solidify understanding of per stirpes and per capita distribution.

EXAMPLE 1:

Consider an example where you, the Grantor, are not survived by your spouse but you are survived by two children (named Amy and Bob), and Amy and Bob will each receive 50% of your estate. Suppose Bob died before you and left a child (named Bob, Jr.). Where should Bob's 50% of your estate go? To Amy, or to Bob, Jr.?

If you want Bob's share to be inherited by Bob's children, then the share passes per stirpes (think of it as "down the stripe"). If you want Amy to get the entire estate (thus shutting out Bob's children), then the estate passes per capita. Per Capita distribution looks at the number of surviving heads on the generational line.

EXAMPLE 2:

The remainder of the estate is to go to Arnold and Betty in equal shares and, if either or both die before the testator, then to their children living per stirpes. Arnold and Betty both die before the Grantor. Arnold has one child, Cindy, and Betty has two children, Debra and Edward. Cindy gets half of the residue; Debra and Edward each get one quarter under a per stirpes distribution.

If a per capita distribution were called for, then Cindy, Debra and Edward would each get one-third.

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