When it comes to estate planning, you have options in distributing your estate. The most common ways to distribute your property are referred to as “per stirpes” and “per capita,” but what do those terms mean?
In a per stirpes distribution, the property is divided into as many shares as there are living children of the designated person and deceased children who have descendants living. If there are deceased descendants, the children of each deceased descendant represent their deceased parent.
For example, let’s say you have two children, John and Mary. Mary has two children, and John has no children. If John and Mary survive you, your estate will be split into two shares and John and Mary will each receive 1/2. If Mary passes away before you, your estate will still be split into two shares. In this situation, John will receive 1/2 and Mary’s children will split her 1/2 (resulting in Mary’s children each receiving 1/4). If John passes away before you and Mary survives you, Mary will receive the entire estate. The estate will not be split into two shares because John had no descendants. Per stirpes is the most common distribution, but it is not the only one.
In a per capita distribution, the initial division of shares is made at the closest generation in which one or more descendants are alive. The shares of deceased persons on that level are treated as one pot and dropped down and divided equally among the representatives in the next generation.
For example, let’s say you have four children, but three of your children do not survive you. Because there is still one living child, your estate will be split into four shares. Your living child will receive 1/4. The remaining 3/4 of your estate will drop down and be distributed equally among the descendants of the children who predeceased you.
This is different from per stirpes. In per stirpes the grandchildren split the portion that would have been their parent’s had they survived. This means that your grandchildren will probably get different shares. Per capita gives all your grandchildren with deceased parents the same share.
This McNeelyLaw LLP publication should not be construed as legal advice or legal opinion of any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.