As you proceed with developing your estate plan, you’ll learn all sorts of new terms. While the sheer number of them can be overwhelming, it’s important to understand them so that you can be sure that your plan will do what you intend it to do.
Two of the terms you should know about if you have children and grandchildren you plan to leave assets to are “per stirpes” and “per capita.”
Per stirpes means “by branch”
This is the more commonly used way to designate what happens to any assets you leave to a family member such as a child in your will if that person predeceases you.
For example, say you have two adult children and they each have children. You designate that your assets will be left equally “to my descendants, per stirpes.” If one of your children dies before you do, their children will automatically be designated to receive their parent’s share of your assets when you pass away (divided equally among them).
Per capita means “by head”
In the example used above, if you’ve designated your adult children to each inherit a share of your assets per capita and one of them dies before you, that child’s share of the inheritance will automatically go to your other adult child.
Which one of these you use, if you use either of them, depends on your family and your intentions for them. Many people prefer per stirpes because it helps ensure that their grandchildren will receive assets intended for a parent who died prematurely.
Even if you don’t choose one of these methods of designating inheritances for your family, it’s good to know what they mean. Some retirement accounts use the same language in their beneficiary designation forms.
Based on your own unique family dynamics and your wishes for your assets after you’re gone, your estate planning attorney can provide options to choose from that will help you ensure that your intentions are clear to those dealing with your estate and that your family is cared for financially.
