Estate planning involves many decisions, including how your assets will be distributed after you pass away. If you’re planning your estate or have been named a beneficiary, you might encounter terms like per stirpes, per capita, and per capita at each generation (also known as by representation). While they may sound confusing, chances are you’ve already considered one or more of them and just didn’t know the legal term. Here’s what they mean and how they work under Arizona law.
Per Stirpes: By Branch of the Family Tree
Per stirpes means “by the roots” in Latin. This distribution method divides an estate by branches of the family. Each branch receives an equal share, regardless of how many individuals are in that branch.
For example, if you have three children and one passes away leaving two children (your grandchildren), your estate would be divided into three equal shares. Your surviving children each receive a 1/3 share, and the two grandchildren split their deceased parent’s share equally, 1/6 to each grandchild.
This is what most of our clients opt to implement in their wills or trusts, but it is not the default under Arizona law if you die without a will or trust.
Per Capita: By Equal Individuals
Per capita means “by the heads.” Here, the estate is distributed equally among all surviving descendants, regardless of their generation.
Using the same scenario, if one of your children predeceases you, their children (your grandchildren) are treated as individuals rather than a branch. Instead of splitting their parent’s share, all living descendants (your two surviving children and two grandchildren) would share equally in your estate, each receiving a 1/4 share.
Per Capita at Each Generation: By Representation
This method blends the principles of per stirpes and per capita. The estate is first divided equally among the nearest living generation. If there are deceased members of that generation, their shares are combined and redistributed equally among the next generation. This approach avoids inequalities seen in per stirpes distributions while ensuring representation for all descendants. This leads to all children being treated equally to each other, and all grandchildren being treated equally to each other.
Importantly, this is the default distribution scheme under Arizona law if you die without a will or trust that directs your assets to be divided differently.
Which Option Is Right for You?
Understanding these distinctions is crucial to crafting an estate plan that reflects your wishes. Arizona law allows flexibility, but clear instructions in your will or trust are essential to avoid confusion or disputes.
If you’re unsure how to structure your estate, consulting with an experienced estate planning attorney can help ensure your legacy is distributed according to your values and intentions.