Having a will drafted is usually a relatively simple process, but you might come upon certain terms that sound confusing.
One of these is the term “per stirpes.” The term comes from Latin and literally means “by branch.” It indicates how you want your assets to be distributed among your beneficiaries.
When you distribute your assets per stirpes, it means that if one of your beneficiaries cannot receive the assets or is deceased, the asset will go to their next living descendants.
An example of per stirpes
For example, perhaps you leave $100,000 in cash to your two siblings, a brother and a sister. Your brother has no children but your sister has two daughters.
If your sister passes away before you do, when you pass away, $50,000 would go to your brother and the remaining $50,000 would be split evenly between your sister’s two daughters.
Per stirpes advantages
Distributing your assets per stirpes can simplify your estate planning. You do not need to worry about updating a will when new family members, such as children or grandchildren, are born.
This decreases the chance for family conflict or will disputes after you pass away. Family members are less likely to fight over a certain person receiving an asset if the person was not named specifically in a will but received the asset because they were next on the “branch.”
Per stirpes disadvantages
Per stirpes might not be best for in some situations. There is a potential for unequal inheritances among family members.
If your son has two children but your daughter has four and both your son and daughter pass away before you do, your son’s children will split his half of the inheritance two ways, but your daughter’s children will split it three ways.
Per stirpes also does not account for spouses. If your child passes away, their inheritance will not go to their spouse, but to your other beneficiaries.
It is best to examine the possible outcomes before deciding if per stirpes is right for you.
Per stirpes is not limited to wills. Trusts, retirement accounts and insurance accounts are other examples of places you can designate assets to be distributed per stirpes.