PA Estate Planning with Life Insurance
Posted by Jason Martin, Esq. on Tue, Aug 02, 2011
One of the most useful tools for purposes of Pennsylvania estate planning is life insurance. Life insurance is a valuable estate planning tool because it can provide immediate liquidity to an estate. Many of my clients in Blue Bell, Lansdale, Norristown, Fort Washington, and the rest of Montgomery County, PA are surprised to learn this. In fact, many of my clients are not even aware of the possibility of including life insurance as part of their estate.
Pennsylvania exempts life insurance from inheritance taxes, although the IRS does not. Therefore, life insurance proceeds are subject to federal estate tax. With the help of an experienced PA estate planning attorney, however, strategic planning with the ownership of life insurance can create substantial estate tax savings through the use of an Irrevocable Life Insurance Trust, commonly referred to as an ILIT. For PA estate planning, the concept of a life insurance trust is relatively simple and straightforward.
If an ILIT is structured properly, the trust can save life insurance proceeds from the federal estate tax. In general, the Irrevocable Life Insurance Trust can be set up as both the owner and beneficiary of one or more life insurance policies. The insured can determine whom the insured wishes to receive the proceeds after his or her death. The designation of the ILIT as owner and beneficiary shifts the policy outside of the insured’s estate so that there are no estate taxes when the policy matures and the proceeds are paid to the trust.
Return to our Pennsylvania Wills, Trusts and Estates practice page.
Contact a Montgomery County, PA Estate Planning Law Firm
The Martin Law Firm is an experienced Montgomery County, PA estate planning law firm that regularly assists clients with the creation and administration of ILITs and other Pennsylvania estate planning documents. Contact the Martin Law Firm to schedule an appointment with an experienced Pennsylvania estate planning lawyer.
Jason Martin, Esq. is an experienced PA estate planning attorney serving residents of Norristown, Lansdale, Blue Bell, King of Prussia and the rest of Montgomery County. The Martin Law Firm, located in Blue Bell, PA, also regularly assists personal representatives and executors with the Pennsylvania probate process and other estate administration matters. Contact The Martin Law Firm today for a free consultation.