A trust fund is a type of financial vehicle that holds the assets used by beneficiaries over time, according to their interests and needs. When you establish a trust for inheritance purposes, it’s not just about managing your funds for future generations – it also helps to avoid any potential conflicts among family members.

Per Stirpes Vs Per Capita Beneficiary Designations is a question that has been asked many times by people in the past. The answer to this question is that it depends on what type of designations are being made. If they are “per capita with representation” then per stirpes would be the correct designation.

Per Stirpes Vs Per Capita Beneficiary Designations

Beneficiary designations are a crucial component of estate planning. Beneficiary designations will decide where the majority of your financial assets go when you die, even if you have your fundamental paperwork in place, such as a final will and testament.

Knowing the difference between ‘per stirpes’ and ‘per capita’ asset distributions is essential for making sure your money goes where you want it to go.

What is the significance of beneficiary designations?

The solution is straightforward. Your beneficiary selections take precedence over anything specified in your estate planning agreements after you pass away.

This is true for almost every bank account. This comprises:

  • Accounts in banks
  • Policies for life insurance
  • Accounts for investments
  • Accounts for retirement

While it is critical to name beneficiaries in the first place, this may not be sufficient. If you have dependent beneficiaries (such as grandkids or nieces and nephews), you should understand the difference between per stirpes and per capita designation.

This post will not recommend any option. The best choice is one that accurately expresses your intentions. It should also work well with the remainder of your estate plan).

This article, on the other hand, seeks to clarify the distinction between per stirpes and per capita. That way, when it comes time to update your beneficiary designations, you’ll be completely aware.

Is this something that everyone has to be concerned about?

Not everyone, however.  

Let’s be clear about it. It probably doesn’t matter if you just have one heir (other than your spouse).

It also makes no difference if you want to donate your riches to charity. Or if you don’t give a damn where your money goes. I was amazed at how often this was expressed to me as a financial advisor.

However, the majority of individuals have numerous children. As well as grandkids. Furthermore, many persons have particular requirements.

In brief, you should understand the differences between per stirpes and per capita distribution laws if you want to identify a dependent beneficiary.

It’s also worth noting that this difference only applies if the account holder’s main beneficiary dies before the account holder. If all of the principal beneficiaries are still alive when the account holder dies, the account is dispersed according to the instructions on file.

Let’s look at each classification with that in mind.

By branch, per Stirpes (Latin phrase)

If the original beneficiary dies before the account holder, any assets that would have been paid to that individual are instead allocated to that person’s immediate descendants. 

It would be simpler to recall if the Latin derivation (by branch) is mentioned. For future generations, a per stirpes distribution plan maintains it within the family branch.

In other words, if a beneficiary predeceases the account holder, per stirpes distribution sends the money to the recipient’s descendants. If you want your descendants to inherit the money, this could be something to think about. 

Example of Per Stirpes Distribution

For instance, John Smith owns a $300,000 IRA. Adam and Ben are his two sons.

John passes away and leaves the IRA to his sons. Each adult son is entitled to $150,000 in equal parts, whether distributed per stirpes or per capita.

Under per stirpes distribution, descendants of the deceased beneficiary are entitled to equal distribution of their shares of the account.Ben’s stake of the account is divided equally between his two children under the per stirpes distribution technique.

If John dies before Ben, the per stirpes allocation pays money to Ben’s offspring.

Let’s pretend Ben dies before John, but Adam does not. Adam would still get his $150,000 portion under per stirpes distribution. Ben’s portion of the inheritance would now be split evenly between his two children, with each receiving $75,000.  

When it comes to ‘per stirpes’ allocation, wives are often overlooked.

If Ben predeceased John, his portion would go to his children (or a trust formed for the benefit of his children) rather than his spouse under the ‘per stirpes’ distribution.

Per Capita (‘by the heads’ in Latin)

If a listed beneficiary predeceases the account holder, the share of that beneficiary is simply dispersed among the same class of beneficiaries.

Remembering the Latin phrase might also help you distribute the money to the family’s’remaining heads.’ If a beneficiary dies, the offspring of that individual are left out in the cold.

Example of Per Capita Distribution

Under per capita distribution, descendants of the deceased beneficiary receive nothing. The deceased beneficiary's share is redistributed throughout the same share of beneficiaries.Ben’s part of the account goes straight to Adam under the per capita distribution approach. Nothing is given to Ben’s children.

If Ben died before John in this situation, Adam would get the whole IRA dividend, while Ben’s children would receive nothing.   

This is something grandparents who do not want their grandkids to receive money directly should think about. Alternatively, they may be worried about the generation-skipping transfer tax. 

What happens if I don’t choose anything?

That is an excellent question. It depends on the circumstances.

Most financial companies, such as Schwab or Fidelity, will default to ‘per capita’ if you don’t specify per stirpes or per population. To put it another way, all assets inside the principal beneficiary designation class.

On Fidelity’s papers, you must check the box labeled “Per Stirpes.” It is otherwise handled as per capita.

Moreover, contingent beneficiaries are not entitled to anything until all of the main beneficiaries die before the account holder.


This article’s guidance comes to an end here. There are several situations that might play out in various ways. Those complex estate difficulties are well beyond the scope of any one essay.

That is why it is a good idea to have an expert estate attorney review your estate planning on a regular basis. As part of your estate planning, you should check your beneficiary designations with your financial adviser on a regular basis.

At the absolute least, you should revisit this every time someone dies, a child is born, or another big life event occurs (such as a marriage or divorce).  

Per stirpes vs by representation is a question that many people have asked. It’s important to understand the difference between these two terms before you begin to make your designations. Reference: per stirpes vs by representation.

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