Choosing your beneficiaries is an important part of estate planning. But estate planning also requires planning for the unexpected: what happens if your designated beneficiary dies before you? A commonly used term in beneficiary designations is per capita by generation – but what exactly does per capita by generation mean?
Per capita by generation is a mix of per stirpes and per capita:
Per stirpes is a common beneficiary designation so that your beneficiaries inherit a fair and equal share of your estate. With a per stirpes designation, any amount that you leave for a beneficiary who dies before you will be passed down evenly to their heirs. Per Stirpes is the default method of dividing a deceased person’s estate in Illinois if the deceased dies without having a will.
Per Capita is a beneficiary designation that delivers equal shares to each heir. If your beneficiary dies before you do, your beneficiary’s children or heirs would receive the same amount as their surviving aunts and uncles. A per capita approach can have unintended consequences.
Using the per capita by generation estate planning approach, the second generation would each get what was promised to them and the heirs in the next generation would each receive an equal share of the portion that would have gone to the entire third generation, regardless of their connection to the second generation.
It takes time to create and execute a plan to protect your legacy for the next generation. An experienced estate planning lawyer can advise you on the best options for your specific situation and the various options to choose your beneficiaries.
Contact the experienced estate planning attorneys at Estate and Probate Legal Group in Dupage County, Illinois, to discuss how to preserve your wealth for the next generation. Call us today at 630-864-5835.