What Does Per Stirpes Mean on a Beneficiary Form? 7 Things, Explained Simply

Here's a question I hear more than you'd think: "There's a little box on my beneficiary form that says per stirpes. Do I check it?" It's one checkbox, it's written in Latin, and it can decide whether your grandchildren inherit anything at all.

A quick word on where I sit. I work with beneficiary forms on annuities and life insurance all the time, so I see what this box does in real life. Wills, trusts, and other legal documents belong to a qualified estate attorney. This is the 101 version, so you know what to ask.

What does per stirpes mean?

Per stirpes means that if one of your beneficiaries dies before you, that person's share goes down to their own children instead of being split among everyone else. The phrase is Latin for "by roots" or "by branch," according to Cornell Law School's Legal Information Institute.

Picture a pecan pie at Thanksgiving, and you've got four kids. You cut it into four slices, one for each. Now say one of your kids can't make it to the table. Per stirpes says that slice still gets served: their children split it between them. Per capita, the way many beneficiary forms use it, says the pie gets cut into three bigger slices instead, and only the three kids at the table get pie. Same pie, very different plates for the grandkids.

What happens if I leave the box unchecked?

On many forms, a beneficiary who dies before you simply drops off, and their share is split among the beneficiaries who are still living. J.P. Morgan's IRA beneficiary form says that unless you designate otherwise, that person's share "will terminate and will be divided equally among the surviving primary or contingent beneficiaries" (J.P. Morgan IRA Beneficiary Update Request).

Here's how that plays out. Say you leave your IRA (individual retirement account) equally to your four children. Your daughter passes away before you do, leaving two kids. Without per stirpes, your other three children each get a third, and her children get nothing from that account. With per stirpes, her one-quarter goes to her two children.

Nobody meant to cut those grandchildren out. A blank box did it.

Is per capita the same thing?

Not quite. Per capita is Latin for "by head," meaning a share is "determined by the number of people" (Cornell Legal Information Institute).

The catch is that "per capita" can mean slightly different things in different documents. Read your own form's wording, or call the company and ask one question: "If my beneficiary dies before me, where does that share go?"

Doesn't Georgia law or my will take care of this?

Not for these accounts. If someone in Georgia dies without a will, state law does follow family branches, giving the descendants of a deceased child "the share that child would have taken if in life" (O.C.G.A. § 53-2-1). That rule covers what passes through probate, though.

Retirement accounts, life insurance, and annuities pass by beneficiary form, outside the will. I covered that in Does a Beneficiary Designation Override a Will? The form wins, so the box on the form is what counts.

Which accounts should I check?

Check every account with a beneficiary form: IRAs, 401(k)s and other workplace plans, life insurance, and annuities. Fidelity's annuity beneficiary form, for example, asks you to check "Per stirpes" if you want a deceased beneficiary's share to go to "his or her legal descendants" (Fidelity annuity beneficiaries form). If you own an annuity, here's what happens to it when you die.

Fall is a handy time to do this, since a lot of employers hold benefits enrollment this time of year.

What if a grandchild is still a minor?

A child generally can't take the money directly. AAA Life puts it plainly: "Minor children cannot directly receive the proceeds of a life insurance policy." If no guardian or custodian is in place, the state may have to appoint one, which AAA calls "a lengthy and costly process" (AAA Life). Custodial accounts and trusts are the usual fixes, and setting those up is estate attorney territory, not mine.

How do I get this right?

Pull out every beneficiary form, find the per stirpes line, and make sure it matches what you'd want if life happened out of order. Nobody plans on outliving a child. A good plan just makes sure the grandchildren aren't left out if it happens.

If you'd like a second set of eyes on how your retirement accounts, annuities, and life insurance fit together, that's the heart of retirement income planning, and I'm always glad to sit down with people here in Perry and across middle Georgia.

Frequently asked questions

Should I always check per stirpes? Not always. Some families want a share to stay with the surviving children. The point is to make it a decision instead of an accident.

Can I choose it for my backup beneficiaries too? Often, yes. J.P. Morgan's form, for example, allows per stirpes for "primary and/or contingent beneficiaries."

This article is for educational purposes only and is not legal, tax, or investment advice. Beneficiary rules vary by company and by state, so please review your situation with a qualified estate attorney or tax professional. Crossroads Financial works alongside tax and legal advisors.