Per Stirpes and Your Will

When you die, what is going to happen to all of your property? Whether it’s money, investments, real estate, or anything else, there is one document that decides where it will go: your will. And per stirpes can help specify many of these questions.  

Why should I have a will?

Death is inevitable, and since we don’t know when it will strike, it’s best to be prepared by ensuring you have executed a will. 

According to a Gallup poll in 2016, 44% of Americans don’t have a will. Wills do more than just distribute your property. A will can appoint guardians for minors, create trusts, designate how inheritance taxes should be paid, appoint an executor, and even make funeral arrangements. Wills can always be changed and updated, but if you don’t have one at all, then the laws of your state will dictate who receives your assets after you die. 

Additionally, having a transparent will can help avoid family arguments over your property after your death. It leaves your family members with a clear picture of what you want, leaving them free to grieve, knowing that they can fulfill the wishes you described in your will.

Designating Beneficiaries

A will probably isn’t something that you will update frequently. Over the years, you may have more children or grandchildren. People designated as beneficiaries in your will may pass away, and changes such as marriage or divorce may occur. Many people who create wills choose to identify how their property will be distributed by using the terms “per stirpes” or “per capita” to ensure that family changes are accounted for.

What does Per Stirpes mean?

Per stirpes is a Latin term meaning “by the roots.” The distribution of property will occur based on the decedent’s (the person who made the will) descendants. For example, if the decedent had three children, each child would receive one-third of the estate.

Things can begin to get tricky when children precede the decedent in death. Let’s say each of the children in the above example has children of their own, who would be the decedent’s grandchildren. If one of the children dies, his one-third would be split between his own children – if he has two children, they would each get half of the one-third that would have been given to their parent. 

Benefits of using per stirpes

Using the designation “Per stirpes” can help account for changes to your familial situation. If you intend to leave assets to your children, but one of them passes away before you do, the per stirpes designation will ensure that their children will receive their parent’s share of the assets. 

Potential drawbacks of using per stirpes

Per stirpes can give you more control over what happens to your assets after you pass.

Per stirpes only allows property to pass to direct descendants. In other words, if your child dies before you, but their spouse is still alive when you die, the spouse will receive nothing because he/she is not your direct descendant. The gift you give in your will would skip over the spouse and go to your grandchildren through the deceased child. It’s worth spending some extra time with an estate planning attorney discussing exactly what will happen. You want to be sure your property is handled exactly the way you’d like it to be.

Here’s another situation that could cause familial strife. Let’s say you have two children. One of them has three children, and one of them has only one child. If both of your children precede you in death, and you’ve used the per stirpes designation in your will, one of your grandchildren will receive half of your estate. At the same time, the other three will divide their parent’s half among themselves, resulting in each receiving one-sixth. Even though all four of your descendants are grandchildren, one could receive much more than the other three simply because he was an only child. 

Retirement and Bank Accounts

It’s worthwhile to note that not all of your property is automatically distributed through your will. Retirement accounts and bank accounts have beneficiaries designated when you set up the accounts, and those beneficiaries will typically supersede what is listed on your will. It’s a good idea to periodically review the beneficiaries listed on the accounts to make sure they match your wishes.

Ultimately, it’s your decision how you would like your property divided up when you pass. If you pass away without a will, your state’s laws will determine what happens to your property. Even if you don’t think you have very much property, having a will can help you make sure that specific items are given to the person you intended, and that your family will not argue about the distribution of your property.