There are a lot of decisions to be made when drafting the right estate plan. That is why it is important to have an experienced estate planning attorney drafting your will and explaining the terminology.
One of the most important decisions involves identifying to whom, and how, you want assets to pass when you die. When creating a will, you will need to name one or more loved ones or beneficiaries who will receive distributions OR the assets are distributed pursuant to state statue. Thoughtful and deliberate estate planning also contemplates what happens to a beneficiary’s share if you outlive him or her.
In some cases, these decisions are relatively simple. If you are a parent of one, and you want to leave 100 percent of your assets to this one child, and you only have one grandchild who will inherit your assets in the event your only child does not survive you – your distribution wishes are relatively straightforward.
For situations where there are multiple beneficiaries at the same level (such as children, grandchildren, siblings, nieces, and nephews, etc.), you’ll need to consider whether you prefer “right of representation” or “per capita” distribution.
By Right of Representation or Per Stirpes
Right of Representation means that assets are divided equally by each branch of the family when there were surviving descendants in that branch. For example, Peter has three children: Sophia, Antonio, and Bob. Peter decides to leave his estate “to his children, by right of representation.”
If all three of her children survive him, each child inherits one-third (1/3) of Peter’s estate.
If Sophia and Antonio survive Peter, but Bob as a beneficiary predeceases Peter, it is necessary to determine whether Bob had any descendants who survived Peter. If Bob had no children, then Sophia and Antonio as the only living children, would each inherit one-half (1/2) of Peter’s estate. (Assuming his Wife predeceased Peter).
Let’s take that same scenario but this time, Bob did have two children who survived Peter (Grandchild 1 and Grandchild 2). The children will inherit the share of the estate set aside for Bob. Under a right of representation distribution plan, this is how Peter’s estate would pass:
- 1/3 to Sophia
- 1/3 to Antonio
- 1/6 to Grandchild 1 (from Bob)
- 1/6 to Grandchild 2 (from Bob)
On the other hand, per capita means assets pass equally to the heirs who are living at the time of the death of the testator at the level stated. Let’s use the same example we reviewed above.
If Peter’s estate was left “to my children, per capita” and he only had three children and no grandchildren, then his estate would be distributed 1/3 to each child. However, if Peter’s two grandchildren, Grandchild 1 and Grandchild 2 (from predeceased Bob), would not receive any distribution:
- 1/2 to Sophia
- 1/2 to Antonio
There is no “right” or “wrong” distribution plan. For some people, per stirpes/right of representation best reflects their wishes. In other cases, people choose per capita distribution. It’s important to understand the difference so you can make sure your trust and will reference the strategy that best aligns with your goals and wishes.
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For a consultation with our Estate Planning attorneys in Centralia or Olympia, call (360) 736-1301 or visit CentraliaLaw.com