Posted On: MARCH 2023
When planning for the disposition of your estate, it’s critical to understand what happens if a child or other beneficiary predeceases you. There’s no one right way to deal with this contingency, but to avoid unintended results your estate plan should spell out, with precise language, how your estate should be divided among loved ones.
If you use incorrect or vague language, you could unintentionally disinherit family members. For example, two common distribution methods are per capita, which means “by the head,” and per stirpes, which means “by the branch.” Let’s suppose that Zeke has three children — Abe, Betty and Carl — and that Abe has three children and Betty and Carl each have one child. If Zeke leaves his assets to his children per capita, then they will be divided equally among them. If Abe predeceases Zeke, then his assets will be divided equally between Betty and Carl, effectively disinheriting Abe’s three children. Had Zeke left his assets to his children per stirpes, then Abe’s children would have split his one-third share.
Another distribution method is by representation, under which all members of the same class or generation are treated equally. This method works similarly to per stirpes unless more than one child predeceases you.
Going back to the previous example, suppose that both Abe and Betty predecease Zeke. If his assets are distributed by representation, then Carl would receive one-third, while Abe and Betty’s children would split the remaining assets four ways. Under the per stirpes method, Carl would receive one-third, Betty’s child would receive one-third and Abe’s children would split the remaining third three ways.
If the language in your estate plan is vague, or you fail to specify a distribution method, state law may designate a method by default.