|
|
|
|
|
| PER STIRPES AND PER CAPITA ... WHAT DO THEY MEAN? In almost every will that is shown to me in estate planning sessions, there appears the term "per stirpes." And, in hundreds of such sessions, I have yet to find a consumer who understands what it means. The two terms "per stirpes" and "per capita" are opposite terms. A will, or other document, usually has one or the other term used at least one time. Literally, the term "per stirpes" means "in the stirrups of" and means that the grandchildren are "in the stirrups of" the children. On the other hand, "per capita" means "by head" or "per head." If the "normal" line of succession pertains, the terms have no effect. If each successive generation dies in order, these terms are not operative. But, if an "out of order" death happens, the procedure governed by these terms becomes operational. I can illustrate the effective meanings easier than I can further define them. Suppose you have two children, Ann and Ben. Ann has one child and Ben has ten children. So, you have eleven grandchildren. If your will says that Ann and Ben are to inherit your estate per stirpes, it means this. "If either of my children die before I die, their children are to receive the inheritance that my child would have received." So, if both Ann and Ben predecease you, Ann's child gets half of your estate and Ben's children get half. Ann's child gets 10 times as much as does each of Ben's children. If, on the other hand, your will said that Ann and Ben are to inherit your estate per capita, ... and if Ann and Ben predecease you, each grandchild receives 1/11 of your estate because they inherit per capita or "by head." Must you choose either one of these alternatives? Not necessarily. You might leave your entire estate to a trust for the grandchildren ... with income back to the children. But, be careful that you do not trigger Generation Skipping Transfer Tax. |
|
