Knowing a few Latin phrases helps when reviewing your estate plan.
When you are preparing an estate plan, one important point that your estate planning lawyer will consider is whether your assets will be distributed 'per stirpes' or 'per capita.'
There is a big difference between the two methods of distribution, and that difference is often critical.
Your estate planning attorney will discuss the pros and cons given your individual situation.
"Per stirpes" in Latin roughly translates to "by roots" "by branch" or "by class" .
"Per capita" in Latin roughly translates "by head".
An estate plan can include either a 'per stirpes' or a 'per capita' distribution statement.
Two simple examples:
Per Stirpes - if you leave your assets to your two children 'per stirpes', when you die, if one of your children has pre-deceased you, their share will be handed down to their heirs/children.
Per Capita - If you leave your assets to your two children 'per capita' - when you die if one of your children has predeceased you, their share will return to your estate and become part of the distribution to the surviving child.
The above is a very simplified explanation and the possible outcomes of either 'per stirpes' or 'per capita' distribution of assets are both varied and complex. There are many possible outcomes based on an individual's familial relationships.
It is beyond the scope of this article to discuss each possible outcome. Your estate planning lawyer can discuss the pros and cons of each method of asset distribution when considering your individual situation.
Each method has advantages and disadvantages.
Note: Beware of situations where you use either method of distribution and at the same time exclude a potential heir from a legacy.
Also, take into account the tax implications of 'per stirpes' or 'per capita' distributions.
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