Estate Planning Law in Vermont: Overview
Vermont imposes a state estate tax with a $5 million exemption and a flat 16% rate on the taxable amount above the exemption. The state is a common law property state with an elective share. Vermont requires two witnesses for wills; holographic wills are not recognized. The state does not have the UPC and uses its own probate statutes. Each of Vermont's 14 counties has a Probate Court. The small estate threshold is $10,000. Vermont does not allow transfer-on-death deeds.
Key Statutes & Deadlines
State Estate Tax
$5 million exemption; flat 16% rate
32 V.S.A. § 7402a
Small Estate Threshold
$10,000 for summary administration
14 V.S.A. § 1902
Will Execution
Two witnesses; no holographic wills
14 V.S.A. § 5
Elective Share
One-third of estate
14 V.S.A. § 401
No TOD Deed
Transfer-on-death deeds not available
N/A
Vermont Estate Tax
Vermont imposes a flat 16% estate tax on the amount exceeding $5 million. While the $5 million exemption is higher than some states, the flat 16% rate is aggressive. Vermont does not allow portability between spouses. Estate tax planning is important for Vermont residents with significant real estate, particularly in resort communities and rural areas with high land values.
Probate System
Vermont has Probate Courts in each of its 14 counties. These courts handle estate administration, guardianship, and trust matters. Vermont does not use the UPC. The small estate threshold of $10,000 is very low, meaning most estates require formal administration. Since Vermont does not have TOD deeds, trusts are essential for probate avoidance on real property.
Trust Planning
Vermont has modern trust laws but does not have a domestic asset protection trust statute. Trusts are important for both probate avoidance and estate tax planning given the $5 million threshold. Irrevocable trusts, charitable planning, and conservation easements are commonly used planning tools.
Vermont Court System
Vermont has Probate Courts in each of its 14 counties. Probate Judges handle estates, guardianship, and related matters. Contested matters may be appealed to the Superior Court. Further appeals go to the Vermont Supreme Court.
Damages & Penalties
Vermont's estate tax is a flat 16% on amounts over $5 million, due nine months after death. The exemption is not portable. Fiduciaries face liability for breach.
Recent Legislative Changes
Vermont has increased its estate tax exemption from $2.75 million to $5 million.
Key Takeaways
- Vermont has a state estate tax: $5 million exemption, flat 16% rate.
- Exemption not portable between spouses.
- Probate Courts in each of 14 counties.
- No transfer-on-death deeds; trusts essential.
- Holographic wills not recognized.
- Small estate threshold is only $10,000.
- Conservation easements are popular planning tools in Vermont.
Frequently Asked Questions
Does Vermont have a state estate tax?
Yes, Vermont taxes the amount over $5 million at a flat 16% rate.
Is the exemption portable?
No, Vermont does not allow portability between spouses.
Does Vermont allow transfer-on-death deeds?
No, trusts are needed for probate avoidance on real property.
Are holographic wills valid?
No, Vermont requires two witnesses.
What is the small estate threshold?
$10,000, one of the lowest in the nation.
What is the elective share?
One-third of the estate.
This guide is provided for general informational purposes only and does not constitute legal advice. Vermont laws may change, and the information here may not apply to your specific situation. For advice tailored to your circumstances, consult with a qualified Vermont attorney.