Legal Question in Wills and Trusts in Pennsylvania

Re: final Long Term Disability (LTD) payment after death

First, life insurance is part of the estate for estate tax purposes of the owner of the policy. Many policies oare owned by the insured, and when that is the case, the death benefit is part of the taxable estate. That is why wealthy families use Irrevocable Life Insurance Trusts, ILITs to avoid that problem. If it is not part of the estate of the owner at all it is just in the sense that the proceeds are paid on death to the named beneficiary, who is a third party beneficiary of the contract, much like the beneficiary of a trust. Therefore, the funds are not paid through a probate proceeding.

Second, LTD payments are paid during the life of the insured, and are the asset of the insured. To the extent the funds paid out in a benefit are not consumed, they become part of the estate of the decedent for probate purposes, unless other avoidance tools are used such as living trusts, Special Needs trusts or lifetime gifts.

You may wish to learn more about the overall subject by reading "Create Your Legacy & Save the Amercian Middle Class" which you can download from the website www.yourlivinglegacy.info. It is written for a lay middle class audience in plain English.

Check it out.