There are two key distinctions to be aware of when selecting one or more life insurance beneficiaries: per capita and per stirpes.
The estate of the deceased is known as intestate when a person passes away without leaving a will. In this scenario, the state will assume management of the estate and make the decision on the beneficiaries. The assets of the estate will be distributed to the deceased’s legal heirs in accordance with the laws of intestacy. Although life insurance preparation is not the topic of this blog, having a will is always advised. The will should be written and executed by a competent individual.
Per Capita
The grantor (you) specifies that only the named beneficiary will receive that portion of the estate by using the term “per capita.” For illustration, suppose your will names your three siblings Susan, David, and Ronald as the beneficiaries. You want the estate to be divided equally among the three. Each sibling will receive a third of the estate if they are all still living. But suppose David, your brother, passes away before you do.
Then 50% of your estate will then go to Ronald and Susan.
Per Stirpes
According to Stirpes – In the same example as earlier, you continue to list your three siblings David, Ronald, and Susan as beneficiaries in your will. You want the estate to be divided equally among the three. Each sibling will receive a third of the estate if they are all still living. Let’s imagine once more that David, your brother, passes away before you do.
His successors will automatically receive a third of his share (such as his children).
When organizing your will, understanding the distinction between Per Capita and Per Stirpes inheritance is crucial. Make sure to select the method that best meets your and your family’s needs.
Disclaimer regarding law and technology: The advice offered here is not legal advice. When given, statements or suggestions are deemed to be effective and valid because they are based on our experience in risk control, mitigation, and transfer. A trained attorney should analyze all legal or contractual terms, including any comments made in a legal setting.