A policy names the insured's three children as equal beneficiaries. One child has died leaving two children of their own. Under a per stirpes beneficiary designation, the two grandchildren receive:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under per stirpes, by branch, distribution, each beneficiary line receives the share the primary beneficiary would have received. If one of three children has died, that child's one-third share passes down to that child's descendants, so the two grandchildren split the one-third equally. Per capita, by head, would instead redistribute the deceased child's share among the surviving named beneficiaries equally. The designation matters greatly when beneficiaries predecease the insured, which is why the choice is documented in the beneficiary designation and reviewed as family circumstances change.
Why the other options are wrong
- B) The share does not revert to the estate under per stirpes; it passes to the deceased child's branch of descendants. Estate reversion would defeat the purpose of the per stirpes election.
- C) One-half reflects a different assumption; each of the three branches receives one-third, and the deceased branch's third is split between the two grandchildren. The surviving branches still receive their full thirds.
- D) Under per capita distribution the surviving children would share equally, but per stirpes specifically favors the deceased child's descendants by giving them the parent's share. The distinction between the two systems is exactly what the designation controls.
Memory hook
Per stirpes = family branches. A branch that is gone still gets its slice, passed down the tree.