When creating an estate plan, decedents choose who receives their assets when they die. These beneficiaries can be an individual or a group of people.
When people leave their estates to a group, they must decide how the benefits get divided if one of those beneficiaries dies before they do.
What is per capita estate distribution?
When leaving an inheritance to a group of beneficiaries, the assets get divided equally among the remaining members of the group if one person dies before the property distribution. The name of this arrangement is “per capita.”
For example, a father can leave his estate to all of his children. If one dies before he does, the assets get split evenly among the other living children, and they each receive a more significant amount than initially planned.
Who does a per stirpes distribution benefit?
Another available option is per stirpes, which means “by branch” in Latin. If one member of the group of beneficiaries dies, that portion of the inheritance stays with that family line and passes down to the next generation.
From the example above, if the father leaves his estate to his children per stirpes and one of his descendants dies before he does, that child’s share of the estate passes down to his or her children. The grandchildren split the inheriting parent’s share of the assets, and the named beneficiaries retain their original proportion of the estate.
Planning for the death of a beneficiary before the disbursement of assets ensures the inheritance gets distributed as the decedent desires.