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INTERPRETATION OF A WILL: WHAT DO PER CAPITA AND PER STIRPES MEAN?

The North Carolina Court of Appeals recently released an opinion in the matter Brawley v. Sherrill.  The parties were disputing the interpretation of a will, which provided per capita distribution of estate assets to the testator’s children, but per stirpes distribution to her grandchildren.  What do these terms mean, and how do they work together in the same estate plan?

 

Per Capita and Per Stirpes Defined

 

For estate plans, the term “surviving” identifies individuals who are alive at the time the testator (the individual leaving the Will) dies.

 

A per capita distribution plan divides estate assets equally to surviving heirs at the level of descendancy stated in the Will (e.g., “to my children” or “to my grandchildren”).  A per stirpes distribution plan divides estate assets equally by each branch of the family when there are surviving descendants in that branch.

 

For a helpful article providing examples to illustrate the differences between per capita and per stirpes distribution, please click here.

 

The Brawley Case

 

In Brawley, the Court was asked to interpret the following Will provisions:

 

ITEM 1: I give devise and bequeath all of my estate and property . . . to my children Billie Cress Sherrill Brawley and Bobby Ray Sherrill, if they are living at the time of my demise, to be theirs absolutely and in fee simple, share and share alike.

 

ITEM 2: If either of my children shall predecease me, I direct that either his or her share shall go to my grandchildren, per stirpes.

 

In this case, the Testatrix had the following descendants: child, Bobby Ray Sherrill (“Bobby Ray”), who had one child, and child, Billie Cress Sherrill Brawley (“Billie Cress”), who had two children.  Bobby Ray died before the Testatrix, but her remaining descendants were alive, requiring the Court to determine how these provisions should be interpreted together.  The Court noted “the intention of the testator is the polar star which is to guide in the interpretation of all wills[.]”  To do this, a court’s primary focus is on the words used in the will.

 

The Court interpreted Item 1 to be a per capita distribution to the children, Bobby Ray and Billie Cress: each child would take a one-half share.  In interpreting Item 2, the Court adopted a definition of per stirpes promulgated by the North Carolina Supreme Court – Wachovia Bank & Trust, Co. v. Bryant – a distribution denoting “division of an estate by representation, a class taking the share to which the deceased whom they represent would have been entitled had he been living.”  The Court interpreted the class defined in Item 2 as “my grandchildren,” per the explicit terms of the Will.  The trial court interpreted this to mean Bobby Ray’s one-half share vested solely in his child, the Testatrix’s grandchild, to the exclusion of Billie Cress’s children.  The Court of Appeals disagreed with this interpretation, instead holding that the explicit terms of the Will require Bobby Ray’s one-half share to be distributed equally among all three grandchildren, with each taking one-sixth.  The Court held that the trial court’s conclusion may have been correct had Item 2 defined its class as the issue (or children) of the predeceased beneficiary.

 

In dissent, Judge Inman stated the majority opinion ignores the well-known legal definition of the term per stirpes, which the Court should presumptively adopt as its meaning in the Will.  Inman held that the definition of the class in Item 2 (my grandchildren) was merely imprecision on the part of the Testatrix, and the plain meaning of per stirpes should have controlled the Court’s opinion of this provision’s meaning.  Further, he held that the first part of Item 2 (“if either of my children shall predecease me”) is a condition precedent to a grandchild taking any share of the estate at all.  In this case, Bobby Ray’s child satisfied this condition – his parent, the child of the Testatrix, predeceased the Testatrix.  Conversely, Billie Cress’s children did not satisfy this condition – their parent, Billie Cress, was still alive when the Testatrix died.  This interpretation falls in line with the conclusion of the trial court, and would create the following distribution: one-half to Billie Cress and one-half to the child of Bobby Ray.

 

Because of Judge Inman’s dissenting opinion, the parties possess a right to appeal to the North Carolina Supreme Court.  As a result, there may be another chapter in this dispute.

 

If you have questions regarding a trusts and estates dispute, please call us at (704) 457-1010 to schedule a consultation.  For more information regarding our firm, attorneys, and practice areas, please visit http://www.lindleylawoffice.com/.

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