The terms per stirpes and per capita come up often in estate planning documents. They are as confusing to clients as they were to me as a first-year law student. But they are so deeply embedded in the legal vocabulary that they don’t appear to be going anywhere. And, as terms of art, they do convey a bunch of meaning in a few syllables. So let’s take a shot at explaining them.
Both per stirpes and per capita are used to describe the situation where a person leaves property to someone who predeceases them. Say, for example, that Joel makes a Will leaving his assets to his five children. One of the children, Sam, predeceases him leaving five children of his own. Who gets Sam’s share of Joel’s assets? The answer depends on whether the distribution is made per stirpes or per capita.
Per Capita Distribution
Per capita is a Latin phrase meaning “by head.” In a pure per capita distribution, you simple count the number of heads. Each of them receives an equal amount.
In the above example, assuming Joel’s will left his estate to his children and grandchildren per capita, the estate would be divided into 9 shares. Each of Sam’s five children would get one share. The other four shares would be divided among Joel’s four surviving children.
If you think about this, this is not what most people would want to happen. The one-fifth that Sam would have received if he had survived gets transformed into a 5/9 interest in the estate. Over 50 percent of the estate is distributed to Sam’s descendants, to the detriment of Joel’s surviving children.
Another option would be for Joel to leave the property “per capita to such of my children as survive me.” But this also has a problem: the entire estate would be distributed in equal quarters to Joel’s surviving children. Sam’s children get nothing.
A final option would be to make the distribution “per capita at each generation.” Under this approach, the assets would be divided at the first generation, with one share allocated to each surviving or predeceased child. Each surviving child would get one share. The remaining shares would be distributed per capita among the children of any of the predeceased child.
Per Stirpes Distribution
Per stirpes is a Latin phrase meaning “by root” or “by branch.” Per stirpes distribution is much more common than per capita distribution. It more closely matches how most people would want their property distributed if a child predeceases them. In per stirpes distribution, the descendants of any deceased child inherit the share that the child would have taken if the child had survived. This is known as a right of representation.
Going back to our example, in a per stirpes distribution, the property would be divided into five equal shares at Joe’s death. Each of Joel’s four surviving children would be entitled one share. The one-fifth share that would have gone to Sam is instead distributed among his descendants in equal shares. Because he has five children, each of them will inherit a 1/25 interest in Joel’s estate. Collectively, this is the same amount that Sam would have inherited had he survived.
My question is, With “per stirpes” what if the heir who dies first has no children but a surviving spouse. This is the situation with my mother-in-laws trust. She has died but the trust has not been divided. Two of the four heirs are married but have no children. What happens to there share of the Trust if one of them die before the Trust is distributed?
Thanks for the comment Keith. You’re actually talking about a different issue. The terms “per stirpes” and “per capita” usually have reference only to descendants. If there aren’t any descendants, then the per stirpes/per capita distinction is moot. That’s a separate issue from who receives property under the trust. A well-drafted trust will usually cover all scenarios. If there is ambiguity, it may be necessary to petition a court for clarification.
I have no children and want to make my brother and sister equal beneficiaries of my IRA. I also want one charitable organization to be the contingent beneficiary. My brother adopted one of my sister-in-law’s chidren. I do not want to pass the IRA amount to that child, because I do not know her. If he should predecease me, how do I ensure that the charitable group gets the benefit and not his child?