Per Capita or Per Stirpes with your IRA?

February 16, 2016 3:59 pm

Sean M. Giles

Financial Advisor

When you selected your beneficiaries on your investment accounts, do you know if you chose “per capita” or “per stirpes”? This is quite important to review now, because you want to make sure you understand how your money is distributed once you’re gone. There is no wrong or right way; there is only your way.  Let’s explain the difference between the two.
Per Capita
You choose to name your two children primary beneficiaries of your IRA account, to split 50/50. Let’s assume that beneficiary #1 is married with three kids and beneficiary #2 is divorced with no children. You and beneficiary #1 both pass away. 100% of your IRA account will now go to beneficiary #2. If one of the beneficaries has passed on, the remaining beneficiary gets their share. This is the default method on most beneficiary forms.


Per Stirpes
Using the same beneficiary example above, let’s now switch it to per stirpes. Beneficiary #1 has passed away, but, since per stirpes was chosen, that 50% share goes to the three children of beneficiary #1, NOT to beneficiary #2 as in per capita. Think of per stirpes as that beneficiary’s descendants. This is not to be confused with a contingent beneficiary. The Contingent only comes into play if the primary beneficiaries are deceased at the time of your death.
So, the next time you are filling out your beneficiary form make sure you stop and think about Per Capita vs Per Stirpes. How you choose to have your funds to be distributed to the next generation is vital because you won’t be around to challenge it. It’s important to note that you can always change and update your beneficiaries as you see fit. If you’re currently working with an advisor, you can check with them to review and confirm your beneficiaries are designated the way you wish.
Sean Giles serves as Financial Advisor at StrategicPoint Investment Advisors in Providence and East Greenwich. You can e-mail him at

The information contained in this post is not intended as investment, tax or legal advice. StrategicPoint Investment Advisors assumes no responsibility for any action or inaction resulting from the contents herein. Sean’s opinions and comments expressed on this site are his own and may not accurately reflect those of the firm. Third party content does not reflect the view of the firm and is not reviewed for completeness or accuracy. It is provided for ease of reference.