A beneficiary designation states 'my children, per stirpes.' If the insured has three children, and one of them predeceases the insured, leaving behind two grandchildren, how would the death benefit be distributed?
- AThe two surviving children would each receive 1/3, and the two grandchildren would each receive 1/6.
- BThe two surviving children would each receive 50% of the death benefit.
- CThe entire death benefit would be divided equally among the two surviving children and two grandchildren.
- DThe two surviving children would each receive 1/2, and the two grandchildren would receive nothing.
Show answer & explanationAnswer & explanation
Correct answer: A. The two surviving children would each receive 1/3, and the two grandchildren would each receive 1/6.
Per stirpes means 'by the branch' or 'by roots.' The death benefit is divided equally among the primary beneficiaries (the children). If a primary beneficiary predeceases the insured, their share passes down to their heirs (the grandchildren), effectively dividing that deceased child's share among their descendants. So, each surviving child gets 1/3, and the deceased child's 1/3 share is split between their two children, meaning each grandchild gets 1/6.
Why the other options are wrong
- B. Incorrect; this describes 'per capita' at the children's level, not 'per stirpes'.
- C. Incorrect; this would be 'per capita' at the grandchildren's level if no children survived, or if the designation was simply 'my descendants per capita'.
- D. Incorrect; this is incorrect for both 'per stirpes' and 'per capita' scenarios.
Per Stirpes Beneficiary Designation
A beneficiary designation that dictates that if a named beneficiary predeceases the insured, that beneficiary's share of the death benefit will pass to their descendants (children, grandchildren, etc.), rather than being divided among the surviving primary beneficiaries.
- Means 'by the branch' or 'by roots'.
- Distributes death benefit equally among primary beneficiaries.
- Deceased primary beneficiary's share goes to their lineal descendants.
- Ensures the original intent of passing wealth down specific family lines.
Memory trick: Beneficiary rules ensure your legacy flows exactly as you intend, either by head or by branch.