Are you considering a Michigan estate plan? If so, you might have come across the terms Per Stirpes and Per Capita. These concepts determine how your assets are distributed after you pass away. Understanding the difference between these two methods ensures the right people inherit your property according to your wishes.
- When and Why Per Stirpes Distribution Is Used in Michigan Estate Planning
- When and Why Per Capita Distribution Is Used in Michigan Estate Planning
- Potential Pitfalls in Choosing the Wrong Distribution Method
- Ensure Your Estate Plan Reflects Your Intentions—Consult Our Michigan Estate Planning Attorneys Today!
If you don’t pick the right approach, it can mean disinheriting a grandchild you meant to include or causing unintended disagreements among surviving family members. Let our knowledgeable Muskegon real estate lawyer further discuss Per Stirpes vs. Per Capita and how to choose the right method for your estate.
When and Why Per Stirpes Distribution Is Used in Michigan Estate Planning
Per Stirpes is a Latin term that translates to “by branch.” Simply, it means that if a beneficiary passes away before you do, the share of that beneficiary goes to their direct descendants. Essentially, it makes sure that each “branch” of the family receives the portion that was originally intended for the deceased beneficiary.
Imagine you have three children—A, B, and C—and each is set to receive an equal one-third share of your estate. Let’s assume B passes away before you do, leaving two children, D and E. With Per Stirpes:
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- A still receives her one-third share.
- C still receives her one-third share.
- D and E split the remaining one-third share that B would have received, so each of them gets one-sixth of your overall estate.
Per Stirpes distribution is often used in estate plans because many people want to ensure that their grandchildren remain protected if one of their children passes away early. Here are some common scenarios where Per Stirpes might be the right choice:
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- Grandchildren Inheritance
If you want your grandchildren to inherit their parent’s share, you would use Per Stirpes. It provides a safety net for your grandchildren if one of your named beneficiaries predeceases you.
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- Large Families
If you have multiple children and many grandchildren, Per Stirpes can simplify how your assets are distributed across different branches of the family, especially when there are many possible heirs.
When and Why Per Capita Distribution Is Used in Michigan Estate Planning
Per Capita is another Latin term that translates to “by the head” or “per person.” In such a distribution method, your assets are split equally among the living beneficiaries. If a named beneficiary dies before you, their descendants typically do not inherit the portion of the deceased unless you specifically name them as beneficiaries as well. Instead, the remaining living beneficiaries split the estate evenly among themselves.
Using the same scenario, each of your three children—A, B, and C—is set to receive an equal one-third share of your estate. B passes away before you do, leaving two children, D and E. Under Per Capita, the share of B doesn’t automatically go to D and E. Rather, A and C each receive one-half of your estate. D and E aren’t included unless your estate plan specifically names them as direct beneficiaries.
Some people prefer Per Capita for its simplicity or because these individuals believe each living beneficiary should receive an equal portion, no matter how many descendants another branch of the family might have. Here are some situations where Per Capita might be applicable:
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- Equal Treatment
If you have multiple beneficiaries, perhaps your children and/or your grandchildren, and you want them all to share your estate equally, you might choose Per Capita.
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- Simpler Family Trees
If your estate includes fewer branches, Per Capita might be more straightforward because you don’t have to account for how the share of a predeceased beneficiary is allocated to their descendants.
Per Capita at Each Generation or by Representation
In Michigan, another approach to distributing an estate is known as “Per Capita at each generation” or “by representation,” where the estate is divided into equal shares based on the generation closest to the individual who passed away with at least one living descendant. Each surviving descendant in that generation receives one equal share. If a descendant in that generation has predeceased the decedent, their share is divided equally among their descendants in the next generation.
Let’s say only C survived you, while A and B both passed away. Each of your three children represents a branch, so you initially create three shares. C automatically takes one full share since she is living. The remaining two shares—the ones A and B would have received—are then divided among their descendants. If A left two children and Brian left three, the total share of the two branches is split equally among the five children.
Potential Pitfalls in Choosing the Wrong Distribution Method
One of the biggest risks in choosing the wrong distribution method is accidentally disinheriting family members you intend to include. For instance, if you selected Per Capita but wanted your grandchildren to receive the share of their deceased parent, specifically in cases where that parent predeceases you, you might unintentionally leave them out.
Even if you pick the right method for your goals, you could still run into problems if your will or living trust documents are unclear. Vague clauses can lead to disputes among your heirs and even legal battles in Muskegon probate court over what you meant. To avoid confusion, it’s important to work with a local Muskegon real estate lawyer who can draft unambiguous language that reflects your intentions.
Furthermore, estate planning is not something you do once and forget about forever. Whenever there is a major birth, death, marriage, divorce, or any other significant event in your family, it’s best to update your will or trust accordingly. If a named beneficiary passes away or a new grandchild is born, it might change how you want your assets distributed.
Ensure Your Estate Plan Reflects Your Intentions—Consult Our Michigan Estate Planning Attorneys Today!
Choosing between Per Stirpes vs. Per Capita is a critical decision in shaping your Michigan estate plan. While both methods aim to distribute your assets, each can lead to very different outcomes. If you aren’t sure which method aligns with your wishes, seeking professional advice is the best course of action.
Bowen Hoogstra Law is here to guide you through these decisions and ensure your documents clearly reflect your wishes. Our competent Muskegon real estate lawyers are ready to talk through your concerns, break down legal terms into simple explanations, and help you choose the best path forward.
We understand that estate planning is personal, so we take the time to learn about your family situation, your values, and your long-term goals. Contact us today at (231) 726-4484 or here to schedule a consultation, and let us give you the peace of mind that comes from knowing your estate will be handled exactly as you’ve intended.