When choosing one or more life insurance beneficiaries, it is important to note that there are 2 major distinctions: Per Capita and Per Stirpes.
When a person dies without a will, the estate of the deceased is called intestate. In this case, the state will take control of the estate and decide who will become the beneficiaries. The property of the estate will pass to the decedent’s heirs at law according to the laws of intestacy. Although this blog is not about life insurance planning, it is always recommended that everyone have a will. The will should be executed by a qualified professional.
Per Capita - the grantor (you) indicates that no one except the named beneficiary receives that share of the estate. For example, let’s say that you name three beneficiaries in your will, your 3 siblings, David, Ronald and Susan. You want all 3 to split the estate equally. If each sibling is alive, each will inherit one third of the estate. But let’s assume that your brother David dies before you do.
Ronald and Susan will then inherit 50% of your estate.
Per Stirpes – In the same example above, you still name three beneficiaries in your will, your 3 siblings, David, Ronald and Susan. You want all 3 to split the estate equally. If each sibling is alive, each will inherit one third of the estate. But let’s assume again that your brother David dies before you do.
His share (one-third) automatically is inherited by his heirs (such as his children).
Knowing the difference between Per Capita and Per Stirpes inheritance is an important factor when organizing your will; make sure to choose the system that best fits the needs of you and your family.
Legal & technical disclaimer: Any advice provided here is not legal advice. Statements or advice are based on our experience in risk control, mitigation, and transfer, and is believed to be effective and valid when provided. All legal or contractual wording, including any suggestions offered in a legal context, should be reviewed by qualified legal counsel.