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Estate Planning Strategies for IRAs: The “Per Stirpes” Designation

Posted by Michael J. O'Connor | CWS®, Vice President Investments
June 12, 2014

Per Stirpes IRA Beneficiary DesignationThe “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

When Setting Up Your IRA Beneficiaries, Ask a Wealth Manager for Help

The beneficiary designations you place on your IRA accounts will generally override any other instructions you leave for the assets – even what you say in your will. Therefore it is important to make sure your exact wishes are represented in the beneficiary designations you choose. The “per stirpes” option is one of many available to you, and we’d encourage you to discuss your estate planning strategies with one of our Wealth Managers. Call us today at 1-800-541-7774 or email us at wealth@wrapmanager.com and we’ll gladly offer you guidance.

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Michael O'Connor Certified Wealth Strategist
By Michael J. O'Connor, CWS

Michael is a Certified Wealth Strategist and Wealth Manager at WrapManager, Inc.


1 Vanguard

2 Oppenheimer Funds


IRA Beneficiaries Estate Planning