What Does "Per Stirpes" Mean? Why is it Important to Have This Language in Your Trust?

Planning for the future means thinking about how your assets will be divided among your family. If you have children, will it be split evenly? If one of your children passes away before you, will their share go to their children (your grandchildren)? This concept is called "Per Stirpes," and it is our topic for today.

What Does Per Stirpes Mean?

Per Stirpes is a legal term used in estate planning to distribute an estate. It means "by branch" in Latin. If a beneficiary predeceases the testator, their share is divided equally among their (the beneficiary's) descendants, rather than being redistributed among the surviving beneficiaries. It's important to give thoughts to this situation and have a plan in place in case it does.

An Example of Per Stirpes

Scenario:

• Grandma Ruth has three children: Alice, Bob, and Carol.
• Alice has two children, Bob has one child, and Carol has three children.

Estate Plan:

Grandma Ruth’s will or trust states that her estate should be divided "per stirpes."

Outcome:

1. Alice passes away before Grandma Ruth. According to "per stirpes" distribution:
   • Alice’s share of Grandma Ruth’s estate will be divided equally between Alice’s two children.
   • Bob and Carol receive their shares as originally planned.
2. If Grandma Ruth's estate is worth $300,000, it is divided as follows:
   • Alice’s Share: $100,000 (which is split between Alice’s two children, so each gets $50,000).
   • Bob’s Share: $100,000 (Bob receives the entire $100,000).
   • Carol’s Share: $100,000 (Carol receives the entire $100,000).

In summary, Grandma Ruth’s estate is divided in a way that honors each branch of the family, ensuring that Alice’s descendants receive her portion and that all branches are equally represented.

Positives of making sure this language is in your will or trust

Fairness: It ensures that each branch of your family receives a fair portion.

Clarity: It clearly outlines how your assets should be divided if a beneficiary isn't around.

Prevents Disputes: Helps avoid confusion or arguments among surviving family members.

Including "per stirpes" in a will or trust is crucial for clearly defining how assets should be passed down through generations, reducing potential disputes and ensuring that each branch of the family is fairly represented.

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