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Blog Articles: Beneficiaries- per Capita or per Stirpes?

Is It Better to Inherit Stock or Cash?
What if parents have wills and their contingent beneficiaries are their two adult children. If one of the adult children dies before the parents, who gets that contingent beneficiary’s share?

It’s not that uncommon that an adult child dies before a parent. The question then arises about who gets that share. Is it the children of the decedent child (the will maker’s grandchildren), or do the will maker’s other children split the share of the decedent child? Wording that affects beneficiaries- “per Capita or per Stirpes”, according to Beck & Lenox Estate Planning & Elder Law, LLC, should be carefully considered when creating a will.

Nj.com’s recent article entitled “Who gets this inheritance if a beneficiary dies?” explains that the language of the will itself governs what happens with each beneficiary’s share in the event one of the adult children dies before his or her parents.

Some wills divide the remainder among the will maker’s children who are still living. With this, the surviving siblings would receive the entire estate.

This is called “per capita,” which is a Latin phrase that translates literally to “by head.” In a per capita distribution, each designated beneficiary receives an inheritance only if they’re living when the inheritance vests (at the will maker’s death).

If a beneficiary dies before this, that beneficiary’s share is divided among the surviving named beneficiaries. As a result, the children of the decedent beneficiary get nothing, unless they are specifically designated as beneficiaries.

However, the more common approach is for a will to state: “I give, devise and bequeath my residuary estate to my descendants, per stirpes.”

Per stirpes is a Latin phrase that translates literally to “by roots” or “by branch.” A per stirpes distribution means that a beneficiary’s share passes to their lineal descendants if the beneficiary dies before the inheritance vests. Per stirpes effectively designates a class of beneficiaries to receive estate property, rather than designating only specific individuals to inherit property.

Therefore, providing this language in the will means that if a child predeceases the testator (will maker) and the predeceased child has surviving descendants, that predeceased child’s share will go to that predeceased child’s descendants … that would be the will maker’s grandchildren.

Ask an experienced estate planning attorney about how each of these designations for beneficiaries, “per Capita or per Stirpes”, would work in your specific situation when you draft or update your will. Beck & Lenox always advises to think through all possible scenarios.

Reference: nj.com (Oct. 28, 2021) “Who gets this inheritance if a beneficiary dies?”

 

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