top of page
  • Writer's pictureMichael Urch

How to Make Sure You Don’t Accidentally Disown Your Grandchildren with Per Stirpes

Everyone should have an estate plan in place. If you don't, we need to talk.


But maybe you already have an estate plan in place, and you’re not worried.


Great! But here’s a question for you:


Do you know what will happen when you die? 


Even if you have a will, your estate plan must be set up as you intend.


Estate planning can be complex, and it’s not uncommon to make mistakes. For example, I’ve seen trusts set up without any assets placed inside of them. 


Let me translate that into everyday speech: someone spent thousands setting up a trust that

they are not using. 


I’ve also seen IRA accounts that have unintentional consequences because of how they were set up.


Everyone should have an estate plan in place.

Let me share one example of someone almost unintentionally disowned their grandchildren. 


The names I’m using here are fictional, but this situation is very common. 


Bob and Janet have three children: Henry, Samuel, and Alice. 


Of their three offspring, only Henry has children.


Bob has put Janet as the beneficiary on his IRA, with Henry, Samuel, and Alice listed

as contingent beneficiaries. 


So, I have an essential question for Bob:


What happens if Henry dies? Are Henry's children next in line as beneficiaries?


Everything depends on whether Henry is listed as an IRA beneficiary PER STIRPES.


Per stirpes stipulates that, should a beneficiary predecease the testator, the beneficiary's share of the inheritance will go to their heirs. 


In other words, if Henry is listed as an IRA beneficiary per stirpes, and he dies before his parents die, then his children will get his share of the inheritance. If they don’t list him that when, then the grandchildren will not get anything. 


What the Will says doesn't matter because IRA beneficiaries supersede those named in

your Will.


This situation is why as financial advisors we do annual beneficiary designation reviews to ensure that our clients understand the inheritance plan they have in place. It’s part of our LifeWealth process. 


Here is the conversation I would have with Bob:


Hi Bob, I completed our annual review of your beneficiaries. You have Janet listed

as the primary beneficiary, followed by your three children in equal shares if Janet

predeceases you. In the unlikely event that Henry dies before you, I believe you would

like his share of the inheritance to be passed along to his grandchildren; is that

correct? – It is? Well, you don't have it set up that way. But don't worry, we can fix it.


This example shows how having a financial advisor who is following a clear process helps ensure that what you care about is protected. Many financial advisors don’t have a process that ensures their clients entire financial picture is covered. 


At 360 we call this our LifeWealth Process and we follow it with every client to ensure nothing slips through the cracks. 


To learn more about how our LifeWealth Process can help you, schedule a meeting by clicking the link below.







Michael Urch

About the Author

Michael Urch

As a CERTIFIED FINANCIAL PLANNER,™ Michael advises his clients on insurance, investment, retirement income, tax, and estate planning. He prides himself on being a professional advisor who puts planning before products. Michael likes to start with each client’s “why.” By understanding what’s truly important to them, the “what” of investment and planning strategies can be custom-designed to support their long-term ambitions.











This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.


This is a hypothetical situation based on real life examples. Names and circumstances have been changed. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or strategies may be appropriate for you, consult your advisor prior to investing.

Commentaires


Les commentaires ont été désactivés.

GET THE ESTATE PLANNING CHECKLIST

 Top 11 Estate Planning Mistakes to Avoid + Simple Guide & Checklist

bottom of page