Life Insurance and PA Inheritance Tax
By Sean Quinlan, Esq. · Updated January 15, 2025
Life insurance is one of the few estate planning tools that is fully exempt from Pennsylvania inheritance tax — provided the beneficiary designation is set up correctly.
Statutory exemption
72 P.S. § 9111(d) exempts life insurance proceeds paid 'to a designated beneficiary other than the estate.' A policy with no beneficiary, or one naming the estate, loses the exemption entirely.
ILITs
An Irrevocable Life Insurance Trust can also remove proceeds from the federal estate, useful for clients above the $13.99M federal threshold.
Audit your beneficiaries
Pull current beneficiary statements from every carrier. Stale designations — especially after divorce — are the most common drafting failure.
This article is general information about Pennsylvania law as of the update date above. It is not legal advice for your situation and does not create an attorney-client relationship. For advice on your specific facts, please schedule a consultation.
Talk with a Pennsylvania estate planning attorney.
Most plans take two meetings. The first is a consultation — clear, honest, and free of pressure.