PA Irrevocable Life Insurance Trust (ILIT)
By Sean Quinlan, Esq. · Updated January 15, 2025
An ILIT is an irrevocable trust that owns a life insurance policy on the settlor's life, removing the proceeds from the federal taxable estate.
Why use one
Estates over the $13.99M federal exemption pay 40% on every dollar of insurance proceeds owned by the decedent. An ILIT eliminates this.
Crummey rights
Annual premium gifts to the ILIT qualify for the gift-tax annual exclusion only if beneficiaries receive Crummey withdrawal notices.
PA inheritance tax
Life insurance paid to a named beneficiary is already exempt from PA inheritance tax under § 9111(d) — the ILIT is primarily a federal estate tax tool.
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.
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