In Nevada law, “by representation” distribution refers to the way in which assets are distributed among multiple beneficiaries through an estate plan, i.e., a will or a trust. One should consider how they want their assets to “flow,” to their beneficiaries in the event of contingencies that may occur, such as a child dying before the death of the last grantor, referred to as the “surviving spouse” or “surviving grantor”.
When a person creates a will or trust, they may choose to divide their assets among several beneficiaries, most commonly, their children. If the distribution plan is made “to my descendants by representation,” each beneficiary will receive an equal share of the estate, based on the number of individuals in their branch of the family tree.
For example, if Mom’s estate plan divides her estate “by representation” among her three children, Abby, Becky, and Cary. Each child would take one equal share, or 1/3 each. But let’s say Cary dies before Mom, leaving two children of her own, Sally and Terry. Under a “by representation” distribution, the estate will be divided into four equal parts: one part for each living child, and one for each living grandchild, four people in total. Thus, all beneficiaries will receive ¼ of Mom’s estate. Under this plan ALL beneficiaries are treated the same: grandchildren are treated the same as children, and thus everyone receives the same share of the estate.
This is a popular choice for distribution as the recipients of the estate are treated equally, and in what many would consider a “fair” manner. A per stirpes distribution tends to be the most appropriate distribution plan for most people, while “per capita by representation” is the least used in our firm due to the possibility that this plan will treat the grantor’s grandchildren of a deceased child, unequally. Per Capita is the least popular among the plans as the descendants of any deceased child may NOT inherit a share of the estate. This is not usually what people want when they are thinking of their children and grandchildren.
It’s important to understand the implications of “by representation”, “per stirpes” and “per capita”. Depending on the family structure and the number of beneficiaries, the type of distribution can either help ensure equal treatment among family members or create unintended consequences. It’s always best to consult with a legal professional when making decisions about estate planning.
by Travis Clark, Esq.