Question

Assume Ariel and Burt marry and have two children, Charlie and Denise. Charlie and Denise marry their spouses and Charlie has one daughter (Eliza) and Denise has two sons (Faustino and Geraldo). Then Charlie and Denise both die in a plane crash.

Burt also dies and leaves sizable assets to Ariel. When she makes her will, Ariel has two options for leaving a bequest for her grandchildren. She leaves her $2 million in cash to her grandchildren. Under a per stirpes distribution, Eliza would take $1 million and Faustino and Geraldo would take $500,000 each. That is, the $2 million is split by the two parts of Ariel and Burt's family - Charlie and Denise. In a per capita distribution, each of the three grandchildren would take $666,666.00, or equal shares per grandchild regardless of who their parents were.

In theory, Ariel and Burt would probably have divided their estates equally between Charlie and Denise had they survived. Does a per capita distribution simply reward people who have more children?

Answer 1

Per stirpes distribution divides assets equally between family lines, while per capita distributes assets equally among all individuals. While per stirpes aligns with how the assets might originally have been divided, per capita treats all grandchildren equally and does not reward individuals for having more children.

Step-by-step explanation:

The question posed revolves around the implication of different modes of bequeathing assets, specifically per stirpes and per capita distributions. In a per stirpes distribution, Eliza would receive $1 million as Charlie’s only heir, while Faustino and Geraldo, as Denise’s heirs, would each receive $500,000. This means the $2 million is divided into two equal parts representing Ariel and Burt's children, Charlie and Denise, irrespective of the number of grandchildren in each line. On the other hand, a per capita distribution would mean each grandchild, i.e., Eliza, Faustino, and Geraldo, receives an equal share of $666,666, regardless of their parentage.

Conceptually, per stirpes seems to align more with how Ariel and Burt would likely have split their estates, that is, evenly between Charlie and Denise. But per capita distribution does not necessarily reward individuals for having more children; rather, it treats all grandchildren equally regardless of how many siblings they might have.