Practice Quiz

Health and Life Insurance

Category - Annuities & Policies

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Tom leaves his estate to his three daughters using a per stirpes designation. The oldest daughter and executor of the estate, dies before Tom. When Tom dies, which of the following would be true of the oldest daughter’s part of the estate?
  1. The proceeds will be split between the remaining two sisters.
  2. Tom must change his policy to prevent the insurance company from collecting the money.
  3. The proceeds will be split between the two remaining daughters and Tom’s estate.
  4. The proceeds will be split between the two remaining daughters and the beneficiary of the deceased daughter’s estate.
Explanation
Answer: D - Under a per stirpes designation, Tom’s estate will be divided between his remaining two daughters and the beneficiary of the deceased daughter’s estate. A per stirpes designation means that the estate passes through to the heirs of the deceased. Per stirpes means through the root, therefore the daughter is the root and the estate passes along the line in her family.
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