You want to leave your estate to your kids and grandkids, and you want it divided evenly.
There are two ways of distributing money — per stirpes and per capita. You can specify either method in your will, trust, retirement accounts, life insurance policies, and other estate planning devices. Both are acceptable options when naming beneficiaries, but the possible outcomes can be drastically different from one approach to the other.
Per stirpes means the proceeds are divided by branch of the family, and per capita means they are divided by head.
Say, for instance, you want to leave the money to your two children, Michael and Theresa, or to your grandchildren if Michael or Theresa predeceases you. Michael has three children and Theresa has one child. Now suppose Michael and Theresa die before you do.
Under per stirpes, half the money would go to Michael’s three children, and half would go to Theresa’s child. Under per capita, the money would be divided equally among Michael’s three children and Theresa’s one child; each receiving 25 percent.
In determining which distribution method matches your intentions, it is always helpful to diagram the possible scenarios. Involving an attorney in complex situations, and even those that appear straightforward, will ensure that your wishes are carried out.