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Per Stripes vs Per Capita Differences

When it comes to understanding per stripes and per capita to set up your estate plan, there can be a lot of confusion. What is the difference between the two? How do they both work? And which one should you use? In this article, we will answer all of these questions. We will start by defining and comparing per stripes vs per capita, and then we will go over each of their differences.

What is Per Stripes in a will?

Per stripes can be defined as way to measure how much money someone gets from an estate. But let’s start with the old definition for per stripe distribution. “Per stripe” comes from the Latin “by branch”, that refers to every person down a family tree beginning from another person (than yourself). Let’s say, everyone below a parent, like children or grandchildren, would make up a branch.

According to the US law, per stripes is used to describe the distribution when a beneficiary dies before the person whose estate is being divided. You can include per stripe in your last will and testament to express who will inherit your assets. This number is found by dividing the total amount of money in the estate by the total number of stripes (people below the will creator in their family) or shares that are given out.

One of the main differences between per capita vs per stripes, is the second is often used in cases where there are many different people who will be getting money from the estate. These can be helpful in cases where there are a lot of heirs, as it can ensure that each person receives an equal share of the assets.

Beneficiaries

Per stripes beneficiaries refer to the distribution each person down the family tree will receive from an estate according to the will and testament established by its relative. The number of stripes (branches) will help determine how much the per stripe’s beneficiary will receive. However, distribution per stripes can lead to smaller shares for each heir because it includes every family member, so it is important to consider all of the implications before using this as part of your will.

Per Capita in a Will

Per capita is an arrangement to distribute estate assets among the designated people who will receive an inheritance. The term “Per capita” translates to “by head.” Therefore, in per capita distributions, each beneficiary receives an equal inheritance, only if they survive after the trust’s grantor passes away.

In a per capita distributions, each beneficiary receives a portion of the grantor’s inheritance. So, surviving heirs – usually descendants – receive an equal share of the assets left by the grantor to them.

Beneficiaries

There are various benefits for beneficiaries in Per Capita arrangements. There’s a difference between stripes vs capita when a beneficiary or surviving heir passes away before vesting, since that share should be divided among their surviving beneficiaries. This means each heir may not receive an equal distribution unlike per stripes distributions but each designated beneficiary and their branch, or heirs, will receive an equal distribution.

Per Stripes vs. Per Capita: Main Differences

There are a few key differences between per stripes and per capita:

  • Per stripes is based on the people below the will creator in the family (or stripes) and what each of these heir receives, while per capita is based on the number of people who receive an equal inheritance.
  • Per stripes can be helpful in cases where there are a lot of heirs, as it can ensure that each person receives a fair share of the assets. However, per stripes can also lead to smaller shares for each heir, so it is important to consider all of the implications before using this metric.
  • Per stripes includes every person down a family tree, while per capita beneficiaries only receive an inheritance if they are living before the inheritance vests.
  • Per stripes is often used in cases where there are many different people who will be getting money from the estate, while per capita is more often used when there are fewer beneficiaries.

Does per stripes go to spouse or children?

Per stripes usually goes to the spouse first, and then to the children if there is no spouse. This is in contrast to per capita, which usually goes to the children first, and then to the spouse if there are no children.

What happens to per stripes if there are no kids?

If there are no children, per stripes goes to the spouse.

What happens with per stripes if there are no descendants?

If there are no descendants, per stripes inheritance goes to the surviving beneficiaries.

Which is better Per Stripes or Per Capita?

When it comes to per stripes v per capita, there are a lot of things to consider before making a decision. Per stripes will help you ensure that each heir receives a fair share of the assets. On the other hand, per capita may not be as equitable as per stripes, but it does ensure that everyone gets an equal share of the assets. It is up to you to decide which distribution method is best suited for your needs.

Read more about assets’ distributions and how to maximize your returns, or access our blog content to find the right resources for your current situation.

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