When it comes to estate planning and the distribution of assets after death, it’s important to understand the terminology and legal frameworks involved. Two common methods of distributing benefits to heirs are "per stirpes" and "per capita," each with distinct implications for how an estate is divided among beneficiaries. Understanding these differences is essential for anyone involved in estate planning, as the choice between per stirpes and per capita can significantly impact how assets are allocated. In this article, we’ll take an in-depth look at these terms and how they relate to estate planning, including key aspects of end-of-life planning like securing life insurance.
Per Stirpes vs. Per Capita Benefits
“Per stirpes," a Latin term meaning "by branch," ensures that if a beneficiary passes away before the testator (the individual who created the will), their share is passed down to their descendants. This method maintains the family lineage and ensures that each branch of the family receives an equitable portion of the estate. For example, if a grandparent leaves an estate to be divided per stirpes among their three children, and one child has passed away, leaving two grandchildren, the deceased child's share would be divided equally between the two grandchildren, ensuring that the family lineage is maintained.
On the other hand, "per capita," meaning "by heads," distributes the estate equally among surviving beneficiaries at the same generational level, regardless of whether any beneficiaries have passed away. This approach can lead to a more straightforward division but may not account for the needs of descendants left behind. For instance, if the same grandparent leaves their estate to be divided per capita among their three children, and one child has passed away, the remaining two children would each receive half of the estate, while the deceased child's share would not be passed down to their children.
Do you still need life insurance if you have a will?
Having a will is an essential part of estate planning, but it does not eliminate the need for life insurance. While a will outlines how your assets will be distributed after your death, life insurance serves a different purpose: providing financial security for your loved ones in the event of your untimely passing. Life insurance can cover immediate expenses for your beneficiaries, such as funeral costs, outstanding debts, and daily living expenses, ensuring that your family is not burdened during a difficult time.
Moreover, life insurance can be particularly beneficial if you have dependents, such as children or a spouse who relies on your income. The death benefit from a life insurance policy can help replace lost income, allowing your family to maintain their standard of living and meet financial obligations. Additionally, life insurance proceeds are typically paid out quickly and can provide liquidity that may not be available through the probate process associated with a will.
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Completing a will and finding life insurance coverage are two crucial aspects of estate planning. When you’re ready to secure your loved ones’ financial future, our licensed insurance agents are here to help. We have nearly 40 years of experience helping guide customers through decisions about life insurance. We’ll take the guesswork out of your hands by gathering quotes from several of the nation’s most trusted carriers all in one place.
