Navigating the complexities of estate distribution, the principle of "share and share alike" emerges as a beacon of equity, ensuring a balanced allocation of assets among beneficiaries. According to a report by the American Academy of Estate Planning Attorneys, this approach is favored in estate planning to prevent disputes, with over 60% of individuals opting for equal distribution to maintain family harmony. When an heir predeceases the estate division, their portion is not lost but rather redistributed equally among the surviving beneficiaries, as detailed by CSU Ohio. This method reflects a commitment to fairness, aiming to simplify the inheritance process and uphold the decedent's intent for equitable sharing.
A will is the most common example of a document that may use a share and share alike clause. When preparing wills, testators can talk about the risks and benefits of various methods of distributing the estate with an attorney. This model of distribution can be a good option when an estate is easily divisible, or when shared assets like real estate are unlikely to create conflict. If children express a wish to co-own a house and share rights to it, for example, they could benefit from this type of will. In another situation, acrimony might make equitable sharing more difficult.
Trusts can also be split on a share and share alike basis. Each beneficiary receives regular payments from the trust in the same amount, with no party getting more or less than others. As beneficiaries die, their shares are returned to the pool, increasing the payout for other trust members. A will may establish a trust for financial or other reasons, in which case the testator may request that the trustee use this distribution system.
In situations involving the division of assets, there are a number of guidelines that must be followed. Usually, an executor or trustee is put in charge of handling matters. The work of this person includes accurately determining the total value of the assets and making sure they are fairly divided. Any fraudulent activity, such as trying to pocket proceeds from the estate, would be grounds for a lawsuit, as it represents a breach of fiduciary duty. Sometimes, a lawyer acts in this role, using her knowledge of the law to make sure the assets are handled appropriately and responsibly.
Testators may want to discuss the terms of their wills with prospective survivors before death. This can provide an opportunity for preparing family members and troubleshooting situations that may arise. It can also be useful for establishing a clear record on the testator's wishes for the estate, reinforcing the will and reducing the risk of confusion.
What Does Share and Share Alike Mean in a Will?
In a last will and testament, the legal term "share and share alike" refers to any part of an estate that has been bequeathed to two or more individuals. So, for example, Isaac owns 30,000 shares of XYZ, Inc. When he makes out his will, he specifies that the shares are to be divided among his heirs, Natalie, Alan and Ted. In a normal scenario, each of them would receive 10,000 shares.
Occasionally, one of the beneficiaries dies before the testator, or the person who made the will, or the will is probated and proceeds distributed. When a beneficiary fails to survive the testator, one of three things can happen. In one of these scenarios, shares left to the deceased are split among the survivors. So in the previous example, if Alan dies or disappears, his 10,000 shares of XYZ Inc. would be divided between Natalie and Ted.
Alternatively, Isaac may have designated a "contingent beneficiary." A contingent beneficiary is second in line; if the primary heir dies or is otherwise unable to receive the inheritance, it goes to the contingent beneficiary. Continuing the example, let us suppose Isaac named Natalie, Alan and Ted as his heirs, and adds Emma as a contingency beneficiary. In this case, Alan's 10,000 shares of XYZ Inc. would go to Emma.
A third situation can arise if Alan passes on and Isaac included a "residue clause" in his will. In this context, the term refers to whatever is left of the estate ("residue") after any expenses, such as outstanding debts, legal expenses or estate taxes have been taken out or have not been otherwise bequeathed to heirs. This residue may be divided among surviving heirs and contingents, or returned to the estate and distributed to survivors under the jurisdiction's laws of intestacy (in other words, as if the testator had died without a will).
Is Share and Share Alike the Same as Per Stirpes?
The foregoing scenario is an example of "per capita" distribution. This is Latin for "by the heads," and is simply a legal description of share and share alike distribution of a decedent's assets.
"Per stirpes" (pronounced "per stree-pez") means "by the branches." Under normal circumstances, unless otherwise specified, a testator's assets would go to the closest generations, such as siblings and children. In a per stripes situation, all genetic descendants of the testator are considered (spouses are not). If one of the beneficiaries dies before the testator's assets are distributed, that beneficiary's natural or legal (adopted) child may stand in their place. Alternatively, a testator may specify that all his descendants receive a portion of the estate.
As an example, let us suppose Alan in the above example has two children, Alan Junior and Alicia. Since Alan Senior has died or disappeared, his children would receive 5000 shares of XYZ Inc, each. In a scenario in which Alan Senior survives and Isaac decides on a per stirpes distribution of the estate, the three siblings and Alan's children would each receive 6,000 shares.
The term per stripes is now considered obsolete and rarely used. Part of the reason is that it is often misunderstood, even by some estate lawyers. For example, a person may state in her will that the estate is distributed to her children per stripes. Technically, this is incorrect; instead of "children,", the term that should be used is "descendants." To the layperson, this may seem like splitting hairs; however, such phrasing can potentially cause serious problems if the will is contested or litigated.
Another potential problem lies in the fact that each state, or jurisdiction, has a slightly different definition of per stirpes. Nonetheless, this is the best option for someone who wants to ensure that all of his or her assets are shared by all members of the family, including grandchildren and great-grandchildren. The testator and attorney must simply make sure that the word "descendants" or "issue" is used in legal documents instead of "children."
What Does Share and Share Alike Mean?
In conclusion, the key here is to understand that a share and share alike will with a per stirpes clause is the most effective way to minimize the chances of conflict among heirs, as everyone gets an equal share. Keep in mind however that such an arrangement works best when distributing liquid assets or stocks and bonds. When it comes to real estate or other types of tangible property (such as vehicles or jewelry), share and share alike can be cumbersome.