Beneficiary Per Stirpes vs. Per Capita – How assets pass down to multiple generations

[Music] So generally speaking there's two different ways that assets can pass down the different issue and kids and grandkids and it depends on whether or not the assets are gonna pass per stirpes or per capita these are very old-fashioned terms but we still use these concepts even today so first Derby's is supposed to be an eye first herpes is a way of passing assets that really just follows the children and grandchildren down so if you have a decedent who's passed away and they have two children and one child has two grandkids and the other child only has one when the decedent passes away if it's going per stirpes then 50% would pass to one child and 50% would pass to the other child now if the children have pre deceased the decedent then that 50% under per stirpes is going to simply go down to their children so in this scenario this grandchild will end up with 50% of the estate whereas these two grandchildren are going to have to split 50% they'll get 25% each rather than the 50% that the other grandchild is receiving that's per stirpes also known as right of representation so in your trust if you say if you see language that says this gift shall pass to my issue by right of representation is the same thing so everybody is going to get their share based on the number of children and grandchildren that each of these separate people have now let's look what happens when assets pass under a per-capita distribution system rather than per stirpes under per capita things are gonna pass a little differently because with per capita we're actually going to look at each generation and we're going to split it equally so under this scenario if the decedent dies with per capita you're gonna end up with 50% going to one child and 50% going to the other child if they survive the decedent if however both of these children have pre deceased the decedent then the assets are going to pass down to the grandkids but unlike per stirpes a right of representation where each child's share is simply passed down to their kids with per capita we're actually going to get rid of this 50/50 and we're going to drop down here and we're going to give each grandchild an equal share so that means each grand cough child is going to get 33% of the estate so rather than one grandchild getting 50% and the other two grandchildren splitting 50% which would make them unequal per capita says just go to the first generation where there's somebody alive and split it equally at that generation so now each grandchild is going to get an equal share so that's the difference between a per capita distribution and a per stirpes distribution so why do people choose a per stirpes distribution which is also known as right of representation versus a per capita distribution well the answer is easy they usually don't most people who do a trust or will have no clue about the difference between per stirpes and per capita and so what ends up happening is you'll have a lawyer who drafts the trust and some lawyers like to do it one way and some lawyers like to do it another way and whatever lawyers you use that's the way that you're probably going to to have it done and your trust or will so it pays to ask the question if my children pre deceased me how will the assets pass down to my grandkids will it be equal will it be unequal those are very good questions to ask your estate planning lawyer so typically most people probably aren't thinking I want it one way or I wanted the other because they have no clue that there's even two ways to do it but now you know there are two ways to do it and you should have that discussion with your estate planning attorney Albertson and Davidson is here to help you fight for your inheritance check out al Dave law Kong for our complete library of helpful legal videos and articles from your favorite California trusts and we'll litigation law firm Albertson and Davidson LLP.