How Per Stirpes Affects Your Estate Planning
When you review your beneficiary forms, you may come across the term “per stirpes.” It sounds complex, but it simply means by branch in Latin. Understanding this term is important because it affects how your assets are passed down if a beneficiary passes away before you.
How Per Stirpes Works
Selecting “per stirpes” on a beneficiary form allows your assets to go to your heir’s children if your heir dies before you. This option ensures that your family’s share continues through their branch of the family, rather than being divided among the remaining beneficiaries or returned to your estate.
The Implications of Per Stirpes
If you name your child as your primary beneficiary and they pass away before you, choosing “per stirpes” would mean that their portion gets passed down to their children. Without that selection, your child’s share could be reallocated to other living beneficiaries or revert to your estate. It is a small box that can make a big difference in how your legacy is carried forward.
How This Choice Impacts Your Family
Choosing “per stirpes” can be especially important in blended families or when you want to make sure your grandchildren are included. Beneficiary designations often default to “per capita,” which divides assets equally among surviving beneficiaries but does not extend distributions to a deceased heir’s children. That is why it is essential to review your forms and confirm that your selection matches your intentions.
Review Your Beneficiary Forms
We encourage clients to regularly review their beneficiary forms for retirement accounts, insurance policies, and estate planning documents. The default settings may not reflect your goals, and this small detail can have a lasting impact on your family. Understanding one term can help ensure your assets are distributed the way you intend. We are here to guide you through these decisions and help you understand how each choice fits into your overall estate and financial plan.
Advisory services offered through NewEdge Advisors, LLC, a registered investment adviser, doing business as Middlebrook Wealth. Securities offered through NewEdge Securities, LLC, Member FINRA/SIPC. NewEdge Advisors, LLC and NewEdge Securities, LLC are wholly owned subsidiaries of NewEdge Capital Group, LLC. Middlebrook Wealth does not provide tax or legal advice. Therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation.