Per Stirpes vs Per Capita: Estate Planning Distribution Methods Explained
How your beneficiary designation affects who inherits your retirement accounts.
Key Takeaways
- 1Per stirpes means "by branch" - deceased beneficiary's share goes to their children
- 2Per capita means "by head" - deceased beneficiary's share redistributes to surviving beneficiaries
- 3Per stirpes protects your grandchildren if your child predeceases you
- 4Per capita keeps money within the same generation
- 5Most retirement accounts use per stirpes by default
- 6Review beneficiary designations after every major life event
- 7Beneficiary forms override your will - update both
Understanding the Terms
These Latin terms describe how inheritance passes when a beneficiary dies before you:
- **Per stirpes** (Latin: "by roots/branch") - Each family branch receives its designated share
- **Per capita** (Latin: "by head") - Surviving individuals split equally
- **Primary beneficiary** - First in line to inherit
- **Contingent beneficiary** - Inherits if primary beneficiary cannot
- **Predeceased** - Died before the account owner
How Per Stirpes Distribution Works
Per stirpes keeps inheritance within family branches. If a beneficiary dies, their share passes to their descendants.
- You name 3 children as equal beneficiaries (33.3% each)
- One child dies before you, leaving 2 grandchildren
- **Per stirpes result**: Each surviving child gets 33.3%, deceased child's 2 grandchildren split their parent's 33.3% (16.65% each)
- The deceased child's branch is preserved
- Grandchildren inherit what their parent would have received
| Scenario | Surviving Child 1 | Surviving Child 2 | Grandchild A | Grandchild B |
|---|---|---|---|---|
| All alive | 33.3% | 33.3% | 0% | 0% |
| Child 3 predeceases (per stirpes) | 33.3% | 33.3% | 16.65% | 16.65% |
How Per Capita Distribution Works
Per capita divides assets equally among surviving beneficiaries only. Deceased beneficiaries' shares are redistributed.
- You name 3 children as equal beneficiaries (33.3% each)
- One child dies before you
- **Per capita result**: 2 surviving children split everything 50/50
- Deceased child's descendants receive nothing
- Money stays within the original generation
| Scenario | Surviving Child 1 | Surviving Child 2 | Grandchild A | Grandchild B |
|---|---|---|---|---|
| All alive | 33.3% | 33.3% | 0% | 0% |
| Child 3 predeceases (per capita) | 50% | 50% | 0% | 0% |
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Per Stirpes vs Per Capita Comparison
Here's a clear comparison of both methods:
| Factor | Per Stirpes | Per Capita |
|---|---|---|
| Meaning | By branch/roots | By head/individual |
| Deceased beneficiary's share | Goes to their children | Redistributed to survivors |
| Protects grandchildren? | Yes | No |
| Keeps money in generation? | No - flows down | Yes |
| Common use | Most retirement accounts | Some trusts, wills |
| Complexity | Can create unequal per-person amounts | Simple equal split |
Which Distribution Method Should You Choose?
The right choice depends on your family situation and values:
- **Choose per stirpes if**: You want to protect grandchildren's inheritance
- **Choose per stirpes if**: Family branches are important to you
- **Choose per stirpes if**: Your children have children of their own
- **Choose per capita if**: You want surviving children to get more
- **Choose per capita if**: Your children don't have children
- **Choose per capita if**: You prefer simplicity over branch preservation
For IRAs, 401ks, and Retirement Accounts
Retirement account beneficiary rules have unique considerations:
- Most custodians default to per stirpes - verify with your plan
- Beneficiary forms **override your will** - they're the controlling document
- Update beneficiaries after marriage, divorce, births, and deaths
- Consider naming a trust if you need more control
- Non-spouse beneficiaries must take distributions within 10 years (SECURE Act)
- Spousal beneficiaries have more flexibility
Critical: Beneficiary Forms Override Your Will
Your will does NOT control who inherits your retirement accounts. The beneficiary form you signed when opening the account is the legal document. If you divorced and never updated your 401k beneficiary, your ex-spouse may inherit everything - even if your will says otherwise.
Protect Your Legacy with a Gold IRA
Whether you choose per stirpes or per capita, you're planning to pass wealth to the next generation. A Gold IRA provides:
- Physical gold that preserves value across generations
- Tangible assets your heirs can hold in their hands
- Protection against inflation eroding your legacy
- Same beneficiary designation options as traditional IRAs
- Wealth that has endured for 5,000 years
Frequently Asked Questions
1What does per stirpes mean on a beneficiary form?
Per stirpes means "by branch." If you list someone as a beneficiary with per stirpes designation, and they die before you, their share passes to their children (your grandchildren). It preserves the family branch's inheritance.
2What happens if I don't specify per stirpes or per capita?
Most retirement accounts default to per stirpes, but policies vary. Some may have a specific default in their plan documents. Always specify your preference explicitly on the beneficiary form to avoid confusion.
3Can I use per stirpes for some beneficiaries and per capita for others?
Generally, no. The distribution method usually applies to all beneficiaries on a single account. If you need different treatment for different branches, consider using separate accounts or a trust.
4Does per stirpes apply if my beneficiary has no children?
If a per stirpes beneficiary dies without descendants, their share typically goes to the other named beneficiaries or their branches. The exact outcome depends on the plan's rules and how the form was completed.
5Should I hire an attorney to set up my beneficiary designations?
For complex family situations (blended families, estranged relatives, minor children), an estate planning attorney can help ensure your wishes are properly documented. For simple situations, the custodian's forms may suffice.
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