The difference between a 'per capita' and a 'per stirpes' beneficiary distribution is that:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Per capita means 'by the head': each living beneficiary in the class receives an equal share. Per stirpes means 'by the branch': the class is divided into branches based on the named beneficiaries, and if a branch's beneficiary has died, that branch's share passes to that beneficiary's descendants. For example, if an insured names three children per stirpes and one child dies leaving two children, the deceased child's share passes equally to those two grandchildren. Per capita would instead give equal shares only to the living children, with nothing to the grandchildren.
Why the other options are wrong
- B) Both terms describe distribution methods for beneficiary designations and estates. Neither is limited to trusts; both apply to individual designations as well.
- C) Neither term affects creditor rights. The distribution method concerns how shares are divided among heirs, not the claims of creditors.
- D) Per stirpes can span generations because a deceased branch is represented by its descendants, so beneficiaries need not be of the same generation.
Memory hook
Per capita equals by head; per stirpes equals by branch. Death reroutes the branch down.