What is the Difference Between Per Stirpes and Per Capita Distribution?
Traditionally, estates have been passed down by per stirpes descent. More recently, this system has been replaced by the per capita by each generation system. Only an estate planning attorney can love and understand these terms.
Under the per stirpes approach, which is Latin for “by the roots,” estate assets are passed down by family group. If you have three children, they will each receive a third of your estate. If any of them predeceases you or dies before a trust distribution, their children will receive their share. If two of your children die before you or before the trust distribution, each family group will receive a third of your estate.
The per capita at each generation approach modifies this to some extent. Let’s say your son, who dies before a trust distribution, had one child and your daughter who also dies before the trust distribution, had three children. Under the per stirpes approach, your son’s child would receive a third of the trust assets and your daughter’s children would share a third, each receiving one ninth of the trust distribution. As a result, the child of your son would receive three times as much as each of his cousins.
The per capita at each generation approach would treat all of your grandchildren equally, all dividing up the two thirds of your estate that would have gone to their parents if they had survived you. As a result, each of your grandchildren would receive one sixth of of your estate or trust (2/3 divided by 4 = 1/6), rather than one third to one and one ninth to the others. Your surviving child would receive one third of your estate under either approach.
Often this distinction is easier to understand through a diagram, such as the one above, than with words. Personally, I feel the per capita approach is more fair, but it’s up to each client to decide what they prefer.