Your estate plan will undoubtedly include a number of legal documents that often containing confusing legal terminology. One set of terms that you may see repeatedly throughout your estate plan is “per stirpes” and/or “per capita”. Both of these terms are used to direct the distribution of estate assets. Using one instead of the other can have a dramatic impact on the distribution of your estate assets, making it important to understand the difference between the two terms.
The terms per stirpes and per capita are typically found in your Last Will and Testament, trust agreements, and other estate planning documents. Per stirpes is more commonly used than per capita; however, either term can be used. In addition, there are variations of the two terms that may be used in some states. For now though, a basic understanding of per stirpes and per capita is a good place to start.
The term per stirpes is Latin which, literally translated, means “by the roots”. When per stirpes is used, the living member in the class of beneficiaries who is closest in relationship to the person making the distribution will receive an equal share. Often, the best way to understand legal terms and concepts is by way of illustration. Therefore, let’s assume that you have three children – Bob, Amy, and Sue. Although Bob and Sue have no children, Amy also has two children – Jack and Jill. If you die, your estate will be distributed as follows under a per stirpes distribution:
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Bob, Amy, Sue, Jack and Jill survive you – Bob, Amy, and Sue each take 1/3 of the estate. Jack and Jill receive nothing.
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Bob, Amy, Jack and Jill survive you – Bob and Amy each take ½ the estate.
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Bob, Sue, Jack and Jill survive you – Bob and Sue each take 1/3 and Jack and Jill take 1/6 each because they split Amy’s share.
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Bob, Jack and Jill survive you – Bob takes ½ and Jack and Jill take ¼ each.
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Bob and Jill survive you – Bob and Jill each take ½ the estate
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Bob, Sue, and Jack survive you – Bob, Sue and Jack each take 1/3 of the estate
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Amy, Jack and Jill survive you – Amy takes the entire estate
Per capita is also a Latin term that means “by the head” when literally translated. When an estate is distributed per capita all of the living members of the identified group will receive an equal share. To see how a per capita distribution changes the division of your estate, assume the same family make-up as above with a per capita distribution:
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Bob, Amy, Sue, Jack and Jill survive you – Bob, Amy, and Sue each take 1/3 of the estate. Jack and Jill receive nothing.
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Bob, Amy, Jack and Jill survive you – Bob and Amy each take ½ the estate.
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Bob, Sue, Jack and Jill survive you – Bob, Sue, Jack and Jill each take ¼ of the estate.
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Bob, Jack and Jill survive you – Bob, Jack and Jill each take 1/3 of the estate.
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Bob and Jill survive you – Bob and Jill each take ½ the estate
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Bob, Sue, and Jack survive you – Bob, Sue and Jack each take 1/3 of the estate
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Amy, Jack and Jill survive you – Amy takes the entire estate
To find out how using per stirpes or per capita will change the distribution of your estate assets consult with your estate planning attorney.
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