Life insurance death benefits are not subject to Montgomery County Inheritance Tax. For PA Inheritance Tax purposes, the proceeds of life insurance policies are exempt. This is true if the life insurance is payable to the estate or to a named beneficiary.

The federal estate tax law is quite different. If the death benefit is paid to the estate of the insured or if the deceased insured owned the policy on the date of death, the whole amount of the death benefit is included in the estate and subject to federal estate tax. It is important for individuals to consider the amount of life insurance that they own in regards to the current federal estate tax exemption. If the death benefit plus an individual’s other estate assets exceed the exemption amount, then the individual should consider use of the Irrevocable Life Insurance Trust (ILIT) for further estate planning.

Contact A PA Probate Lawyer in Montgomery County

An executor or personal representative of a Montgomery County estate should always seek the advice of experienced counsel who can provide proper guidance. The Martin Law Firm is experienced in probate and estate administration matters and regularly assists executors and personal representatives with preparation and filing of PA Inheritance Tax returns. Please contact the Martin Law Firm today for a free consultation. Please also visit our PA Wills, Trusts and Estates Blog for more information.