Per stirpes is a term commonly used in legal and financial contexts. It is a Latin phrase that translates to “by the roots” or “by branch” in English. Per stirpes refer to a method of distributing inheritance to the descendants of a deceased person in a family tree. This article will explain what per stirpes means, how it works, and its implications in different situations.
What is Per Stirpes?
It is a legal term that refers to a method of distributing property or assets to the descendants of a deceased person. It is often used in wills, trusts, insurance policies, and other legal documents to specify how assets should be divided among a family tree.
Under per stirpes distribution, the descendants of the deceased person receive an equal share of the inheritance. However, if one of the descendants has predeceased the person, their share is divided among their descendants.
How Does Per Stirpes Work?
There is distribution is based on dividing an inheritance by branch or lineage. It ensures that the descendants of a deceased person receive an equal share of the inheritance. Regardless of how many children or grandchildren they have.
To understand how per stirpes works, let’s consider an example. Suppose that John is a father of two children. They die and leave his estate to his children, Jane and Michael, per Stirpes. If both Jane and Michael are alive, they will receive an equal share of John’s estate. However, if Jane has predeceased John and has two children, Jack and Jill, Jack and Jill will each receive half of Jane’s share of John’s estate.
Per Stirpes vs. Per Capita
Both methods involve dividing an inheritance among descendants, there are significant differences between them.
Per capita distribution involves dividing an inheritance equally among living descendants. Regardless of their relationship with the deceased person. This means that each living descendant receives an equal share of the inheritance. Regardless of whether they are children, grandchildren, or great-grandchildren.
Per stirpes, on the other hand, divides an inheritance by branch or lineage. This means that the descendants of a deceased person receive an equal share of the inheritance. If a descendant has predeceased the person, their share is divided among their own descendants.
Examples of Per Stirpes Distribution
Per stirpes distribution can be illustrated with the following examples:
- Example 1: Mary dies and leaves her estate to her children, John and Jane, per Stirpes. John is alive but Jane has predeceased Mary, leaving behind two children, Jack and Jill. Jack and Jill will each receive half of Jane’s share of Mary’s estate.
- Example 2: John dies and leaves his estate to his grandchildren, per Stirpes. John has two children, Jane and Michael, and Jane has three children, Jack, Jill, and Joe. Michael has no children. Jack and Jill will each receive one-third of John’s estate. Joe will receive one-third of Jane’s share of John’s estate.
Per Stirpes in Estate Planning
There is commonly used in estate planning to ensure that assets are distributed among a family tree fairly and equitably. By specifying stirpes distribution in a will, a person can ensure that their estate is distributed among their descendants. If some of them have predeceased the person. This can prevent disputes among family members and ensure that the person’s wishes are carried out.
However, it is important to note that per stirpes distribution can become complicated if a descendant has multiple children. As their share of the inheritance may need to be divided among their children. This can also result in a smaller share of the inheritance for each descendant.
Per Stirpes in Business Succession Planning
Per stirpes can also be used in business succession planning to ensure that ownership of a business is passed down to the next generation fairly and equitably. By specifying per stirpes distribution in a buy-sell agreement. For example, the shares of a deceased owner can be divided among their descendants.
However, per stirpes distribution may not always be the best option for business succession planning. As it can result in multiple owners and a lack of control over the business. Other methods, such as a trust or a buy-sell agreement with a predetermined purchaser, may be more appropriate.
Per Stirpes in Insurance
It is often used in life insurance policies to specify how the death benefit should be distributed among a person’s beneficiaries. By specifying per stirpes distribution, a person can ensure that their descendants receive an equal share of the death benefit. Even if some of them have predeceased the person.
However, it is important to regularly review and update the beneficiaries of a life insurance policy to ensure. They reflect the person’s current wishes and family situation.
Per Stirpes in Trusts
It can also be used in trusts to specify how the assets should be distributed among a person’s beneficiaries. By specifying per stirpes distribution in a trust, a person can ensure that their descendants receive an equal share of the assets. Even if some of them have predeceased the person.
However, like with estate planning, stirpes distribution can become complicated if a beneficiary has multiple children, as their share of the assets may need to be divided among their children.
Pros and Cons of Per Stirpes
There is distribution has both pros and cons, depending on the situation. Some of the pros of per stirpes include:
- Ensuring that descendants receive an equal share of the inheritance or assets
- Preventing disputes among family members
- Carrying out the person’s wishes regarding the distribution of their estate or assets
Some of the cons of per stirpes include:
- Complicated distribution if a beneficiary has multiple children
- A smaller share of the inheritance or assets for each descendant
- Lack of control over the distribution of the inheritance or assets
Conclusion
There is a legal term that refers to a method of distributing an inheritance or assets among a family tree. It ensures that the descendants of a deceased person receive an equal share, even if some of them have predeceased the person. There is commonly used in estate planning, business succession planning, insurance, and trusts. While stirpes distribution has pros and cons, it can be useful for ensuring that assets are distributed fairly and equitably.