If you have ever completed a beneficiary designation for a life insurance policy or retirement account, you may have encountered the term “per stirpes” and wondered what exactly it meant. Per stirpes is a Latin phrase that means “by branch” or “by roots.” In estate planning—like in wills, trusts, or beneficiary designations – it is used to explain how your assets should be passed on if the person you chose as your beneficiary dies before you. When considering whether you wish to incorporate the term “per stirpes” into your estate planning, it is important that you understand the effect the term has on the distribution of your assets upon death.
Wisconsin statute. § 854.04 defines the term “per stirpes”, as well as other phrases that may be used to incorporate the same distribution pattern. If your will, trust or beneficiary designation calls for property to be distributed to the descendants of a designated person “by representation,” “by right of representation,” or “per stirpes,” this will be the order of distribution:
- Your estate is divided into equal shares for each of your deceased beneficiary’s children.
- If any of those children have passed away but left children of their own, those children receive their parent’s share.
- This process continues down the family line until everything is distributed.
In many cases, incorporating the term “per stirpes” into your will, trust or beneficiary designation can be an efficient way to designate contingent beneficiaries. However, you need to carefully consider whether this distribution pattern follows your intentions.
If the person you designate as primary beneficiary passes away before you, do you want the property to go directly to their descendants or would you prefer the property be distributed to their spouse? Would you want the assets reallocated among the other surviving primary beneficiaries? Are the descendants of the primary beneficiary capable of managing the property, or would they need assistance managing any inheritance they receive?
These are important questions you should discuss with an experienced estate planning attorney, who can help you prepare to the best plan for your family and goals.