What Does 'Per Stirpes' Mean on an IRA Beneficiary Form?
IRA beneficiary forms sometimes include a small checkbox with unfamiliar Latin wording next to it. That single choice, easy to skip past, can meaningfully change who ends up inheriting an account.
The short answer
“Per stirpes” is a designation that directs a deceased beneficiary’s intended share of an IRA down to that beneficiary’s own descendants, rather than letting it be absorbed and redistributed among the other named beneficiaries. Without it, most custodians default to the opposite approach, sometimes called “per capita,” where a deceased beneficiary’s share simply gets divided among the remaining surviving beneficiaries.
A simple way to picture the difference
Picture an IRA owner naming three beneficiaries: three adult children, each set to receive an equal share. If one of those children dies before the account owner, and that child has children of their own, the per stirpes versus per capita choice determines what happens next. Under a per stirpes designation, that deceased child’s share passes down to their own children, split among them. Under the default per capita approach, that share instead gets folded back in and divided among the two surviving siblings, and the deceased child’s children receive nothing directly from that IRA.
Why this distinction matters to families
Neither approach is inherently right or wrong; they simply reflect different intentions. A per stirpes designation tends to appeal to account owners who think of their primary and contingent beneficiaries as representing entire family branches, where a grandchild should effectively step into a deceased parent’s place. A per capita default tends to appeal more naturally to owners who simply want the money split among whoever in the originally named group is actually still living when the time comes, without extending it down a generation. Because the outcomes can differ substantially, this is a detail worth understanding rather than leaving to whatever a custodian’s paperwork defaults to.
Where the choice gets recorded
The per stirpes election, when offered, is typically a checkbox or a specific line directly on the IRA’s beneficiary designation form, distinct from anything written in a will. Because this form generally controls the account’s transfer on its own, without input from other estate documents, the election needs to be made correctly on the IRA paperwork itself to actually take effect for that account.
A complication worth knowing about
When a per stirpes share passes down to a minor grandchild, that inheritance often can’t go directly into the child’s hands. Minors generally can’t own an inherited account directly, so additional steps, such as a court-supervised arrangement or a trust structure, may end up being necessary before that share is actually usable by the child. This is one of the reasons families sometimes pair a per stirpes designation with other estate-planning steps rather than relying on the checkbox alone.
What to weigh
Because rules around beneficiary designations and how custodians interpret them can vary and change over time, it’s worth confirming exactly how a given per stirpes election would apply to a specific account rather than assuming every custodian handles it identically. Understanding the difference between the two defaults, and which one better reflects an owner’s actual intentions, is the main thing to weigh before completing the form.