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Every year, we review beneficiary designations with clients and find the same thing: most people have no idea what the checkbox labeled 'per stirpes' actually means — or whether it's been checked on their accounts.
This is not a minor detail. A single beneficiary designation election can determine whether your grandchildren inherit your IRA or whether that money flows to the wrong person entirely. It can redirect hundreds of thousands of dollars — or more — in ways you never intended. And it can happen years after you filed the paperwork, when you're no longer around to correct it.
“Per stirpes” is a Latin term that most people glance past when filling out account forms. But understanding it — and making sure your elections reflect what you actually want — is one of the most important things you can do in estate planning. It takes five minutes and costs nothing. Getting it wrong can cost your family a great deal.
Here's everything you need to know.
Before defining the term, it helps to understand what problem it addresses.
Most people name beneficiaries on their financial accounts — IRAs, 401(k)s, life insurance policies, certain brokerage accounts — with the assumption that those people will be alive to receive the funds when they pass away.
People pass away in unexpected orders. A spouse dies first, then a named contingent beneficiary dies, and the account owner never updated the paperwork. Life is unpredictable, and beneficiary forms were filed once, years ago, during a job onboarding or account opening, and forgotten.
When a named beneficiary predeceases the account owner, the question becomes: where does that money go?
Without any specific instruction, the answer depends on the custodian's default rules — and those rules may not reflect your wishes. In many cases, the funds are redistributed to the remaining living beneficiaries. That can mean one child receives everything when you intended the other child's share to pass to their children. It can mean a grandchild receives nothing. It can mean assets leave a family branch entirely.
Per stirpes is the mechanism that keeps a deceased beneficiary's share within their family branch.
Per stirpes comes from Latin, meaning 'by branch' or 'by roots.' In the context of estate planning and beneficiary designations, it means that if a named beneficiary dies before the account owner, that beneficiary's share passes to their descendants — typically their children — rather than being redistributed to other surviving beneficiaries.
Think of a family tree. Each child represents a branch. Per stirpes ensures that each branch receives its intended share of the estate, even if the person at the top of that branch is no longer living. The share simply flows down the branch to the next generation.
Without a per stirpes election, a deceased beneficiary's share typically redistributes to the surviving beneficiaries — a result that may or may not reflect what the account owner intended.
Janice is a 78-year-old widow with a $3 million IRA. She has two adult children: David and Susan. She has named them as equal co-primary beneficiaries — 50% each. Janice is very close with her granddaughter, Emma (Susan’s daughter). In Janice’s mind, if something ever happened to Susan, she would want Emma to inherit Susan's share of her IRA.
Now suppose Susan dies unexpectedly — two years before Janice does. Janice is grieving and doesn't think to update her beneficiary forms. When Janice passes away, the question of where Susan's 50% goes depends entirely on that one checkbox.
That single checkbox — per stirpes or per capita — determined whether Emma received $1.5 million or nothing.
Per capita means 'by head' — each living named beneficiary receives an equal share of the estate. If one of the named beneficiaries has already died, their share is redistributed equally among the surviving named beneficiaries.
Per capita is the default election on most financial accounts. If you haven't specifically selected per stirpes, per capita is almost certainly what's in place.
Per capita is not inherently wrong. In some situations — particularly when you don't have a specific interest in keeping assets within a family branch — it may be exactly what you want. But for most families naming children and grandchildren, per capita creates the risk of unintentional disinheritance.
Per stirpes means 'by branch' — each named beneficiary represents a family branch, and if that beneficiary predeceases the account owner, their share passes down their branch to their descendants.
The key distinction: with per stirpes, the share stays in the branch. It doesn't redistribute to the other branches. The grandchildren of a predeceased child inherit their parent's intended share.
You may occasionally encounter the term 'pro rata' in estate planning discussions. Pro rata refers to proportional allocation based on assigned percentages — it describes how percentages are divided among named beneficiaries but doesn't address what happens when a beneficiary predeceases you. It is not typically a substitute for per stirpes or per capita.
The per stirpes rule can cascade through multiple generations if necessary. Consider this example:
Robert has three adult children: Anna, Ben, and Claire. He names them each as primary beneficiaries at 33.3% each. All three have children of their own. Suppose both Anna and Ben predecease Robert.
Under per stirpes:
The result: the total estate is distributed across Claire and three grandchildren. Each family branch retains its proportional share of the estate, flowing down to the next living generation within that branch.
Without per stirpes, Anna and Ben's combined 66.6% would flow entirely to Claire — an outcome that would likely surprise and disappoint Robert, and potentially devastate his grandchildren's expectations.
Per stirpes elections are available — but not always required or even allowed — across a range of account types:
Per stirpes is a powerful default for most families — but it is not universally appropriate. Here are situations where it may fall short or where alternatives deserve consideration.
Per stirpes follows bloodlines. Stepchildren you helped raise but never legally adopted are not descendants in the eyes of the law. If you have stepchildren or other non-biological heirs you care deeply about, per stirpes will not direct assets to them when a biological child predeceases you. Explicit designations or a trust with specific language are typically necessary.
If per stirpes sends assets to grandchildren who are minors, those children cannot legally receive the funds directly. A court-supervised custodian or guardian may need to be appointed — which adds complexity, expense, and loss of control over how the assets are managed. If there's a possibility of assets flowing to minor grandchildren, a trust with a trustee designated to manage those assets may be a better solution.
If the grandchildren who might inherit through per stirpes are young adults who you believe are not yet equipped to manage a significant inheritance responsibly, per stirpes alone provides no protection. A trust can stagger distributions — for example, one-third at age 25, one-third at 30, and the remainder at 35 — in ways that a simple beneficiary designation cannot.
Per stirpes designations don't account for who would be the most tax-efficient heir. A younger beneficiary inheriting a Traditional IRA faces the 10-year rule under current law and must fully distribute the account within 10 years of the original owner's death. If that beneficiary is in a high tax bracket during those years, the tax cost of the inheritance could be significant. Per stirpes doesn't optimize for this — but a thoughtful estate plan can.
If you've named a charitable organization as one of your beneficiaries alongside family members, per stirpes is irrelevant for the charitable share — charities don't have descendants. The structure of charitable and family beneficiary splits requires specific attention.
Most custodians allow you to name both primary and contingent beneficiaries. Understanding how these layers interact with per stirpes is important.
Primary beneficiaries are the first in line to receive your assets. If your primary beneficiary is alive at the time of your death, they inherit the account. Contingent beneficiaries are irrelevant unless all primary beneficiaries have predeceased you.
Contingent beneficiaries serve as a backup layer. They only inherit if all primary beneficiaries have died before you.
A common setup for a married couple with children: spouse as 100% primary beneficiary, children as equal contingent beneficiaries. If the spouse predeceases you, the children inherit. Per stirpes on the contingent beneficiary layer ensures that if one child predeceases you, that child's share flows to their children rather than being redistributed to the surviving sibling.
Important: Many people forget to elect per stirpes on the contingent beneficiary layer, even when they've elected it for primary beneficiaries. Review both layers carefully.
Start by making a complete list of all accounts that have beneficiary designations: IRAs, 401(k)s, 403(b)s, life insurance policies, annuities, and taxable accounts with TOD designations. Don't overlook older accounts from previous employers or insurance policies you opened decades ago.
Contact each custodian, insurance carrier, or plan administrator and request a copy of the beneficiary designation currently on file. Do not rely on memory or a form you filled out years ago.
Verify that the named beneficiaries, percentage allocations, and per stirpes or per capita elections are exactly what you intend. Look specifically for:
If any changes are needed, contact the custodian or plan administrator and request their beneficiary designation form. Most custodians have online portals where this can be completed digitally. When completing the form, look for the per stirpes/per capita election — it is often a checkbox, a dropdown, or a written notation you add to each beneficiary line. Don't skip it.
Once you submit a new beneficiary designation, follow up to confirm it was processed and is reflected in your account records. Request confirmation in writing if possible. A form that was submitted but not processed does not protect your heirs.
Beneficiary designations should be reviewed at least once per year as part of your annual financial planning review, and immediately following any major life event: a birth, a death, a marriage, a divorce, a significant inheritance, or a new account opening.
Yes. The per stirpes election on a Roth IRA works the same way as on a Traditional IRA. If a named beneficiary predeceases you, their share passes to their descendants under a per stirpes election rather than redistributing to other surviving beneficiaries.
If a named beneficiary predeceases you and has no descendants, their share typically lapses and redistributes to the other named beneficiaries according to your designated percentages. Per stirpes only directs the share to the beneficiary's descendants — if there are none, the share must go somewhere else.
Yes, per stirpes is recognized throughout California and in all U.S. states, though some states may use slightly different terminology or have default inheritance laws that affect how assets are distributed in the absence of a specific election. For estates with assets in multiple states, consult with an estate planning attorney.
Some employer-sponsored plans have preset distribution rules that don't support custom elections like per stirpes. Contact your plan administrator to understand your options — which may include specifying individual beneficiaries with explicit percentages or rolling the account to an IRA upon retirement, where you may have more flexibility.
At a minimum, annually — as part of your regular financial planning review. And immediately after any major life event: a birth, death, marriage, divorce, or significant change in your financial situation.
Per stirpes is a two-word Latin phrase that most people gloss over on a financial form. But for many families, it is the difference between assets flowing exactly as intended and a grandchild being inadvertently disinherited.
The good news is that this is one of the easiest estate planning decisions to make — once you understand what it means. For most families naming children and grandchildren as beneficiaries, per stirpes is the more protective choice. It keeps each family branch whole and ensures that the premature death of a child doesn't unintentionally redirect their inheritance to someone else.
But per stirpes is not a complete estate plan. It is one tool among many. For families with blended relationships, minor grandchildren, significant assets, tax complexity, or specific wishes about how and when assets are distributed, the conversation needs to go further — into trusts, coordinated tax planning, and a comprehensive review of every account's designation.
Disclosure: This article is for informational purposes only and does not constitute personalized tax, legal, or investment advice. Tax and estate rules are subject to change. Please consult a qualified financial advisor, CPA, and estate planning attorney for guidance specific to your situation. Arcadia Private Wealth LLC is a Registered Investment Adviser in the state of California. Advisory services are only offered to clients or prospective clients where we are properly registered or exempt from registration.
Grant Webster, CFP®, TPCP®
Founder, Wealth Advisor