"Per Stirpes" Distribution in Estate Planning
Sep 02, 2011
Many of you may have heard the term “per stirpes” stated, either reading it in your estate planning documents, or hearing it at a law office, etc. This is a legal “term of art” (usual language) that deals with how your assets would be distributed, should one of your children pre-decease you. Per stirpes distribution means this instance would be handled by a provision in your estate planning documents that says if a child pre-deceases you, his or her share would be split equally among his or her kids. If he or she has no surviving children, then that share could be distributed to your other surviving children, or another option that you choose.
Aside from who inherits your assets should one or more of your children pre-decease you, we discussed how this person(s) would inherit the assets. If a beneficiary is a minor, he or she would not be able to inherit individually outright. However, if they are the age of majority (18), they legally could individually inherit and own the property outright. However, if you gave an 18 year old a great sum of assets / dollars outright, this could be dangerous. Many times 18 year olds do not have the maturity to handle a sum of that size. Accordingly, many estate plans include a trust to protect the inheritance and have it available to the beneficiary, but only for certain things (health, education, maintenance and support). Then, at an age where you believe they are mature enough to handle it (25-30, usually), you can direct that the trust be cancelled and the beneficiary receives it outright.
This is something to discuss with your attorney, and come to your own conclusions on what works best for you.
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