Estate planning in Vermont means preparing a valid will, plus often a trust, powers of attorney, and health care directives, so your assets pass as you intend. Vermont has its own estate tax with a flat $5 million exemption per person and a 16 percent rate above that, so larger estates need specific planning.
That flat exemption does not adjust for inflation and does not transfer between spouses, which makes married couples' planning especially important here. FastWill's will package covers your core documents, and a trust can help larger estates plan around the tax.
Understanding the Basics
Estate planning is the process of arranging how your assets will be managed if you become incapacitated and how they will be distributed after your death. Key elements include:
- Wills to outline property distribution and name guardians for minor children
- Trusts to protect assets and plan around Vermont's estate tax
- Powers of attorney to allow someone to act on your behalf if you cannot
- Advance directives to make your health care wishes clear
Vermont imposes its own estate tax on estates above $5,000,000, according to the Vermont Department of Taxes. Unlike many states, this exemption is a fixed flat amount rather than one that adjusts each year, and it does not carry over between spouses, so each spouse's estate is measured against its own $5 million exemption. The tax rate on the amount above the exemption is a flat 16 percent.
Estate Planning Terms
- Will: Outlines how property will be distributed and may name guardians.
- Trust: A legal arrangement allowing a trustee to manage assets for beneficiaries.
- Power of attorney: Lets someone act on your behalf, often in case of incapacity.
- Executor: Manages your estate and ensures your wishes are carried out.
- Probate: Court process for validating a will and distributing assets.
Building Your Vermont Estate Plan
In Vermont, estate planning can be tailored to fit your situation:
- Inventory your assets and estimate their combined value against the $5 million estate tax exemption.
- Draft a will to name guardians and an executor.
- Consider a trust if you want to reduce tax exposure or shield wealth from creditors.
- Establish financial and health care powers of attorney.
- Review the plan regularly, especially as your assets grow.
Wills in Vermont
Under 14 V.S.A. Section 5, a valid will requires:
- A written document, signed in the presence of two or more credible witnesses by the testator, or by another person in the testator's presence and at the testator's express direction
- Attestation and subscription by the witnesses in the presence of the testator and of each other
An interested witness does not automatically invalidate the will, though any gift to that witness may be void unless the witness is also an heir. Learn the fundamentals in our guide to writing your own will, then build a compliant document with the will package.
Trusts in Vermont
Trusts give you more control and flexibility than a will alone:
- Revocable trusts can be changed during your lifetime and help avoid probate.
- Irrevocable trusts provide stronger asset protection and can help reduce exposure to Vermont's estate tax, since properly structured gifts made during your lifetime fall outside your taxable estate.
- Special needs trusts ensure financial support for a disabled loved one without affecting their benefits.
See how a trust differs from a will in our guide to wills versus trusts, then compare options with FastWill's trust package.
Financial Powers of Attorney
A financial power of attorney allows someone you trust to manage your finances if you become incapacitated. They can pay bills, manage investments, and handle property transactions on your behalf. Having one in place prevents financial disruption and avoids the need for a court-supervised guardianship.
Health Care Decisions
Health care planning in Vermont usually involves an advance directive (living will), which states your medical treatment preferences, including end-of-life care, and a health care proxy, which appoints someone you trust to make medical decisions if you cannot. Together, these tools protect your autonomy and guide health care providers in honoring your wishes.
Transferring an Estate in Vermont
Transferring an estate involves following probate procedures unless assets are held in trusts or pass directly through beneficiary designations. The process usually includes:
- Filing the will with probate court.
- Appointing an executor or administrator.
- Providing a death certificate and inventory of assets.
- Notifying creditors and settling debts.
- Filing an estate tax return with the Vermont Department of Taxes if the estate exceeds $5,000,000.
- Distributing property to beneficiaries.
If there is no will, Vermont's intestacy law determines how property is divided, usually prioritizing spouses and children.
Essential Transfer Documents
- Death certificate, required to begin probate
- Original will
- Inventory of assets
- Letters testamentary or letters of administration, authorizing the executor or administrator to act
- Vermont estate tax return, if the estate exceeds the exemption
These documents ensure transfers are handled lawfully and efficiently.
Frequently Asked Questions
Does Vermont have an estate tax?
Yes. Vermont taxes estates above a flat $5,000,000 exemption at a rate of 16 percent on the amount above the threshold, according to the Vermont Department of Taxes. The exemption does not adjust for inflation and does not transfer between spouses.
How many witnesses does a Vermont will need?
Two or more credible witnesses are required under 14 V.S.A. Section 5, and they must attest and sign in the presence of the testator and of each other.
Can married couples combine their Vermont estate tax exemptions?
No. Vermont's estate tax does not offer portability between spouses, so each spouse has a separate $5 million exemption, which makes coordinated planning important for couples with combined estates near or above $10 million.
What happens if I die without a will in Vermont?
Your estate is distributed under Vermont's intestacy statute, which follows a fixed formula that may not reflect your actual wishes.
Does a trust avoid Vermont's estate tax?
Not automatically. A revocable trust's assets are still counted in your taxable estate. Reducing exposure generally requires irrevocable planning done well in advance, so consult a licensed Vermont estate planning attorney for estates near the exemption.
Start Your Vermont Estate Plan
Estate planning in Vermont protects your family and helps you plan around the state's estate tax. FastWill's will package and trust package are built around Vermont's requirements. Compare your options on our plans and pricing page and get started today.
