Legal Definitions - per stirpes

Per stirpes is a legal term used in estate planning, such as in wills, trusts, or beneficiary designations for accounts like life insurance or retirement funds. It dictates how assets should be distributed if one of the intended beneficiaries dies before the person who created the estate plan.

When a distribution is designated "per stirpes," it means that if a primary beneficiary passes away, their share of the inheritance does not revert to the other surviving primary beneficiaries. Instead, that deceased beneficiary's share is passed down to their direct descendants (like their children or grandchildren), who then divide that specific share among themselves. This method ensures that each "branch" of the family maintains its intended portion of the inheritance, even if a member of that branch predeceases the grantor.

Here are some examples illustrating how per stirpes works:

• Example 1: A Grandparent's Will

  • Scenario: Eleanor's will states that her estate should be divided equally among her three children: Robert, Susan, and Thomas, "per stirpes." Sadly, Thomas passes away before Eleanor, leaving behind two children of his own, Chloe and Daniel.
  • How per stirpes applies: Under the "per stirpes" instruction, Robert and Susan each receive their one-third share of Eleanor's estate. Thomas's one-third share does not go to Robert and Susan. Instead, it is passed down to his children, Chloe and Daniel, who then equally split Thomas's one-third share between themselves (each receiving one-sixth of the total estate). This ensures Thomas's "branch" of the family still receives its intended portion.

• Example 2: Life Insurance Beneficiary Designation

  • Scenario: Michael names his two siblings, Laura and Peter, as primary beneficiaries for his life insurance policy, with a "per stirpes" distribution. Peter later passes away, leaving behind a daughter, Isabella. Michael then passes away a few years later.
  • How per stirpes applies: Because of the "per stirpes" designation, Laura receives her 50% share of the life insurance proceeds. Peter's 50% share does not go to Laura; instead, it is paid directly to his daughter, Isabella. This ensures that Peter's lineage receives the benefit he would have received.

• Example 3: A Family Trust

  • Scenario: The Chen family trust specifies that upon the death of the last surviving parent, the remaining assets are to be distributed "per stirpes" to their two children, Mei and Jian. Mei has three children, and Jian has two children. If Jian passes away before both parents, leaving his two children, and then the parents pass away.
  • How per stirpes applies: Mei receives her one-half share of the trust assets. Jian's one-half share is then divided equally between his two children (the grandchildren of the original grantors), with each receiving one-quarter of the total trust assets. This maintains the distribution to Jian's "branch" of the family, even though he was not alive to receive it directly.