The “per stirpes” IRA beneficiary designation is a useful tool for ensuring your assets are distributed equally amongst your lineal descendants (children, grandchildren) or those legally adopted. It helps makes sure that each of your children receives an equal share of your assets, and that their share remains in their family in the event they are not there to inherit your assets.

How the “Per Stirpes” IRA Beneficiary Option Works

Say you have a $2,000,000 IRA and four children, and you want each child to receive $500,000. One of your children has three children of his own. If you set up your beneficiaries as “to my descendants that survive me, per stirpes,” your kids would each receive their $500,000, and your three grandchildren would split the $500,000 in the event they inherit the assets. Each grandchild in this case would receive one-third of the $500,000 share, or roughly $166,667 each.¹

What makes the “per stirpes” designation different from assigning each child as a 25% primary beneficiary is the fact that the assets ‘flow through’ to grandchildren in the event they inherit the assets in place of one of your children. In the above example, if you had assigned each child as a 25% primary beneficiary, the $500,000 share would have been split amongst your remaining children and would not have flowed through to your grandchildren.²

IRA Beneficiaries Estate Planning