What does per stipes mean, and what is the difference between per stirpes and by representation in my will?
Latin may be a dead language, but Latin is alive and well in the world of estate planning. Per stirpes is an estate planning term that when translated means “by the root.” Generally, per stirpes refers to a distribution of assets to lineal descendants. However, what does per stirpes really mean, and how does it differ from a gift “by representation”?
(*I am an attorney, but I am not your attorney. Nothing in this post constitutes an attorney-client relationship or should be taken as legal advice. The information here is merely for educational and informational purposes. You should always discuss your situation with your own attorney.)
Your Estate Plan is Personal to You
As an estate planning attorney, I can easily tell you that every person that I meet with has a vastly different outlook on their assets and their death. While most estate plans have many of the same building blocks, they all differ. My clients all have wildly different ideas about what to do, who receives what, and what is fair.
RELATED POST: Why every adult needs a personalized estate plan.
Passing Your Assets to the Next Generation: Per Stirpes or By Representation
However, most parents end up leaving the vast majority of their estate to their children. They may make other specific gifts, divide assets in different portions, or even control the distribution through a trust, but, for the most part, assets usually pass to the next generation.
RELATED POST: Why you might want to consider a trust.
Sadly, some children don’t outlive their parents. While the idea of laying a child to rest before the parent is terrible, too many parents have to face that reality.
Further, even if you outlive your children, your estate planning attorney will always plan for contingencies.
Therefore, after I discuss what you own, how you own it, what it’s worth, and who you want to receive it, I start discussing contingencies. (For a handy, simple estate planning questionnaire to help you get started check this out.)
RELATED POST: What your estate planning attorney needs to know.
Simply put, I ask my client: “Who do you want to receive your assets if one of your children predeceases you?
Do you want it to go to your grandchildren, your other child/children, or the child’s spouse? Someone else?
While most people have decided that they want their assets to pass to their children, they rarely consider distributions beyond that.
So, my question about a contingency plan catches them off guard. The answers that follow are varied and many. And, we have a legal term for almost all of them.
How to Divide an Estate if a Beneficiary Predeceases the Testator: Compare Per Stirpes and By Representation.
Per stirpes, per capita, by representation, and by survivorship are all terms that you might see in your estate plan. They don’t mean much by themselves, but to an estate planning attorney they have vastly different meanings.
Two of the most often confused terms are per stirpes and by representation. Let’s look at what is different between per stirpes and by representation and examples of why they matter to you.
Let’s consider them here.
Per Stirpes
Per stirpes (or perstipital shares) refers to a distribution that follows legal and biological descendancy. Literally translated it means “by the root.”
But who is the root? The person to whom the initial gift is made is the root, and his or her issue (children, or in some cases other biological family) are the next in line.
A gift per stirpes never includes spouses or non-legal children. A per stirpes gift can go on indefinitely (think great great great great great grandchildren!).
However, a gift per stirpes is ALWAYS defined by a beneficiary’s relationship to the root.
In other words, if a mother has 3 children and wants to divide her estate per stirpes, then each of her children would receive 1/3. However, if one of her children dies leaving 3 living children, then those three living grandchildren would divide 1/3 of the grandmother’s estate among them.
In the same way, if each of the 3 children predecease their mother, and each child dies leaving his or her own children, then each grandchild would have to split his or her parent’s 1/3 share with the siblings. If one of the predeceased children only has 1 child, then that 1 child would receive the entirety of the parent’s 1/3 share.
However, if another child died leaving 3 children, then those 3 surviving grandchildren would each only receive 1/9 dividing the parents’ 1/3 share among them equally.
By Representation
A gift by representation on the other hand can sound very similar to a per stirpes gift. A gift by representation passes assets to the biological issue (or if there are no issue to other extended family).
Again, a by representation gift never goes to spouses or non-biological/non-legal family of the beneficiary.
RELATED POST: Estate Planning and Special Considerations for Blended Families
However, unlike a per stirpes gift, which is linked to the relationship to the root, a by representation gift is linked to the level of descendancy.
A by representation gift is all about distance away from the predeceased generation.
When a gift is made by representation, the gift is divided into as many shares as there are living people at the highest generation and as many shares as predeceased with living issue.
Let’s look at some examples:
Example of by representation 1:
Mother has 2 biological children. Mother makes a will that leaves the entire residue of her estate to her children by representation. One child predeceases Mother with 2 living children. When mother dies, her other child is still living, and the residue of her estate is divided into 2 shares. Her living child will receive 1 share, and the living children of her predeceased child will divide the other share.
If that sounds a lot like per stirpes, you are right. But, things start to look different with only a small change in the facts.
Example of by representation 2:
Mother has 2 biological children. Mother makes a will that leaves the entire residue of her estate to her children by representation. Both children predecease Mother. Child 1 dies leaving 2 children. Child 2 dies leaving 3 children.
After Mother dies, her estate will not be divided into 2 shares, but instead, it will be divided into 5 shares. Each grandchild will receive a 1/5 share. The residue of the estate is divided into as many shares as are represented by the highest generation of living issue.
In this case, the generation closest to the beneficiary is the grandchild generation. Therefore, the estate divides into as many shares as there are living grandchildren + as many shares of grandchildren who died with living issue.
Your Estate Plan Should Fit You and Your Family
Every family has a little bit different idea about what is fair and equal. Some families opt to leave out per stirpes distributions or by representation gifts altogether in favor of a “by survivorship” gift. This means that only those who actually survive the gift-giver receive the assets.
At any rate, the terms per stirpes and by representation can be found in a myriad of estate planning documents, and they make absolutely no sense without interpretation.
If you find the terms per stirpes or by representation in your estate plan, be sure you understand what they mean for your family.
Per stirpes is by the root or based on the beneficiary’s relationship to the predeceased individual. By representation, on the other hand, is based on the beneficiary’s generational level.
If you want to leave a gift that stays in your family and passes to your grandchildren or beyond, be certain that you understand how per stirpes and by representation change your estate plan.