Standard Legal’s Living Trust Agreements generally fall into one of two categories: Trusts that pass property to the Grantor’s children; and Trusts that pass property to specifically named beneficiaries
For both of these types of Standard Legal Trusts, the Grantor can choose a how to distribute property to his/her named Beneficiaries if any of these individuals predecease (pass away before) the Grantor.
The choices are “per stirpes” or “per capita.”
And the choice of distribution provides a structure for addressing for contingent Beneficiaries.
“Per stirpes” is the more commonly used method of distribution. Upon the death of any of the Grantor’s Beneficiaries (whether it be Children, Nephews/Nieces, family friends, etc.), property is passed through lineal distribution to the heirs of the deceased Beneficiaries (and if the Beneficiary is the Grantor’s Children, the lineal descendants would be the Grantor’s grandchildren).
If the Grantor chooses “per capita” distribution, then all of the living members of the identified group (e.g. the Grantor’s nieces and nephews) will receive an equal share of the trust estate. However, if a member of that identified group dies, then a distributive share of the estate will not be created for the deceased member and the distributive shares of the other members of the identified group will be increased accordingly. As an example: The Grantor and his or her spouse has died and they are survived by two adult Beneficiaries, Amy and Bob. Regardless of whether per stirpes or per capita is chosen, Amy and Bob will each receive 50% of the Grantor’s estate upon the death of the Grantor and his or her spouse. But, if Bob dies before either the Grantor or his or her spouse, where would Bob’s 50% share of the estate go upon the death of the Grantor and the spouse? If the Grantor wants Bob’s share to be inherited by Bob’s Beneficiaries, then the Grantor would choose “per stirpes” distribution. On the other hand, if the Grantor wants Amy to inherit the entire estate (which would result in Bob’s Beneficiaries receiving nothing), then the Grantor would choose a “per capita” distribution.
To take the example further, assume both Amy and Bob have predeceased the Grantor and the spouse. Amy has one child named Carl; Bob has two Beneficiaries, Daniel and Elizabeth. If the Grantor had chosen a “per stirpes” distribution, then Carl (Amy’s only son) gets ½ of the Trust estate while Daniel and Elizabeth (Bob’s Beneficiaries) each get ¼ of the estate. But, if the Grantor had chosen a “per capita” distribution, each of the Grantor’s grandchildren (Carl, Daniel and Elizabeth) would receive an equal 1/3 share of the Trust estate.
As such, the “per stirpes” and “per capita” designations provide for alternate or successor beneficiaries should any of the named beneficiaries predecease the Grantor.
Of course, if any of the Grantor’s Beneficiaries die while the Grantor is alive, the Grantor can amend the Trust to address specific scenarios of distribution of the Trust property.