Even if you don’t have an estate plan, you may have come across the phrase “Per Stirpes” before. If you have a life insurance policy, a retirement plan, or a 401K, you likely at some point filled out a beneficiary designation form, and you may have been asked to check a box whether you wanted you wanted your assets to be distributed “Per Stirpes” or not. Maybe you didn’t quite know what it meant. I know some people who have misread the word entirely and asked me what is meant by “Per Stripes” (as in what a zebra has, or the Bill Murray movie).
“Per Stirpes” is a Latin term. It’s another one of those annoying instances where lawyers keep around a Latin phrase for no other reason than to make people think we’re smarter than you. It translates to “by branch”. The other Latin term that you often hear along with it is “Per Capita”, which is Latin for “by head”. Both of these terms have to do with what happens if one if your beneficiaries (usually your kids) dies before you do.
Let’s say, you have three children: Alice, Bob, and Charlie. You estate plan documents direct that your estate be divided equally amongst your children. But unfortunately, Bob falls to his death while taking a selfie at the edge of the Grand Canyon. Assuming you don’t do anything to change your estate plan (more about that later), what will happens to Bob’s share of your estate when you’re gone? Well, if your estate plan called for the distribution to be “Per Capita”, then your estate will be divided equally between Alice and Charlie. Instead of each getting a 1/3, they’re each getting 1/2. (Fueling suspicion that maybe Bob was pushed?) But if your estate plan called for the distribution to be “Per Stirpes”, then Alice and Charlie will each get 1/3 of your estate, as you intended, and Bob’s 1/3 share will be split equally amongst his two children, Belle and Beulah. (1/6 each)
Most people, when asked on their beneficiary documents, will select a”Per Stirpes” distribution, because it doesn’t leave the grandkids with nothing (and it has the effect of not encouraging fratricide).
In fact, Per Stirpes (which is set out at Section 240 of the California Probate Code) is so widely agreed-upon to be the preferred distribution method when a named beneficiary has died, that if you don’t specify a contrary method in your estate plan documents, Per Stirpes, by default, will apply. (California Probate Code section 245).
The California Probate Code also lists two other variations on “Per Stirpes”. These variations are described in sections 246 and 247 of the Probate Code. (The method described in Section 247 is technically known as “Per Capita at each generation”, but it really is just a variation on Per Stirpes). These will not apply unless you specifically state in your estate planning documents that you want these sections to apply.
If you’re wondering what the differences are between these three sections, I recommend you go to the law library and look up these code sections in the Probate Code. The Probate Code book contains generational diagrams that don’t appear in the online versions. Without the diagrams, it’s very hard to understand the differences. But I must warn you that these diagrams, while very helpful in illustrating the difference between the statutes, are almost comedically morbid. They routinely involve hypothetical scenarios where the testator has three or four children, and he manages to outlive all of them, as well as some of his grandchildren and great-grandchildren. It’s tragic to the point of being absurd. (And yes, I’m sure that scenarios like that have actually happened before in the annals of human history. But if you’re the poor hypothetical guy in the diagram who has seen all your children, half your grandchildren, and a third of your great-grandchildren die before you do, I think you’d be better off trying to find a grief counselor than an estate planning attorney.)
I thought about trying to explain the differences in the statutes here, but then I realized that it would be way too confusing and boring for anyone who isn’t an estate planning lawyer. But here’s the kicker: If you’re doing estate planning responsibly, all of it is mostly irrelevant. Why? Because the difference between these statutes only apply when beneficiaries die before you do. If you’re doing estate planning properly, you’re amending your estate plan if a beneficiary dies. Go back to the hypothetical. When Bob dies, you should be amending your trust to reflect how you want your estate divided between Alice, Charlie, Belle, and Beulah. Maybe you want divide it four equal ways. Maybe you want Alice and Charlie to keep their original 1/3 share, and have Belle and Beulah get 1/6. Or maybe none of the above. The point is, you should be the one deciding, and the decision should be made after it happens. When you plan your estate, its perfectly fine (in fact, it is desirable) to have a contingency plan in place for what happens if a beneficiary dies before you do. After all, there’s a chance that you could die before you have a chance to amend your estate plan. But that contingency plan shouldn’t be a substitute for a revised estate plan once a beneficiary has died.
This is a point that I think a lot of estate planning attorneys fail to impress on people: Having an estate plan is not a “one and done” activity. You wouldn’t buy a Porsche and then not bring it in for maintenance occasionally. If you go through the trouble and expense of having an estate plan, it would be a shame and a waste of your efforts to not keep it updated. It’s much more important that you keep your estate plan current an updated than that you learn the differences between Probate Code sections 240, 246, and 247 (That is, unless you’re trying to pass the Bar Exam)
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(A couple of final thoughts on the differences between the three statutes. First, you’re not limited to those three options. You can devise whatever plan you want for when a beneficiary dies, and your estate planning attorney should be able to incorporate those plans into your estate planning documents. Second, when I meet with clients, I will go over how each of the three statutes would apply to their situation. The irony is, in most cases, these three statues yield identical results. Go back once more to the hypothetical involving Alice, Bob, and Charlie. It doesn’t matter which statute you use, they all yield the same result. Alice gets 1/3, Charlie gets 1/3, and Beulah and Belle each get 1/6. It’s only in scenarios where there are multiple deaths among the first generation of children that these statutes begin to yield different results)
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