37. Vanessa's policy on her life names her three brothers as beneficiaries to share equally in the proceeds. If any of the brothers predeceases Vanessa, that brother's share will be passed on to his children. Vanessa's beneficiary designation is known as
Answer: A
Vanessa's beneficiary designation is known as per stirpes.
This policy indicates that if any of Vanessa's brothers predeceases her, his share will be distributed to his children, which is characteristic of a per stirpes designation.
A) per stirpes.
This option is correct because "per stirpes" is a legal term that means "by branch." It ensures that if a beneficiary (in this case, a brother) dies before the policyholder, their share of the inheritance will be passed down to their children, maintaining the intended distribution among the family branches.
B) tertiary.
This option is incorrect as "tertiary" refers to a third level or stage and does not relate to beneficiary designations in estate planning. It does not describe any method of distributing assets among beneficiaries.
C) irrevocable.
This option is incorrect because "irrevocable" refers to a designation that cannot be changed once established. While Vanessa's designation has specific terms regarding her brothers and their children, it does not imply that the designation itself is irrevocable.
D) per capita.
This option is incorrect as "per capita" means "by heads" and would distribute the proceeds equally among living beneficiaries at the time of distribution. If one brother predeceases Vanessa, his share would not go to his children under a per capita designation, which is contrary to the policy described.
Conclusion
The designation of beneficiaries as per stirpes is appropriate for Vanessa's policy since it allows for the equitable distribution of her life insurance proceeds to her brothers and, if necessary, to their children. The other options fail to accurately describe the distribution method outlined in her policy, making "per stirpes" the definitive correct answer.