Vermont Estate Planning Considerations
Common Law State
Vermont is a Common Law State, which means the rules governing the ownership, division, and inheritance of income and property acquired by a husband or wife during their marriage holds that subject to various qualifications, each spouse owns and has complete control over his or her income and property.
Last Will and Testament
The minimum age of a person competent to make a will is 18. The number of witnesses necessary to execute a will is two.
Uniform Gifts to Minors Act (UGMA)
The original custodial gift may be a life insurance policy or annuity contract on (1) the minor’s life if the minor’s estate is the beneficiary, or (2) the life of any of the minor’s parents, grandparents, siblings, aunts, and uncles, including relationships by the whole blood, half-blood, or adoption, provided the custodian is the designated beneficiary.
The statute does not explicitly authorize the use of custodial property to purchase a new policy. Still, custodial property apparently may be used to pay premiums on an original policy transferred to the custodianship.
The custodial arrangement terminates when the minor turns age 18 (or upon the death of the minor).
Dying without a Last Will, the Vermont Laws of Intestacy.
The estate goes to the surviving spouse, as follows:
- If there are no surviving descendants, —100% of the estate
- If all surviving descendants are also descendants of the spouse, —100% of the estate
- If one or more descendants are not descendants of the surviving spouse, —50% of the estate
If there is no surviving spouse, or if a portion of the estate does not go to the spouse:
- 100% to surviving descendants by right of representation (which is not defined in the statute)
If there is no surviving spouse or descendant:
- 100% to surviving parent or parents equally
If there is no surviving spouse, descendant, or parent:
- 100% to siblings and the descendants of deceased siblings, by right of representation
If none of the above:
- Intestacy laws outline further distribution steps to the level of grandparents, next of kin, and descendants. See 14 V.S.A. §314(b)(3), (4).
- If no legally described recipient can be found, intestate assets go to the state of Vermont.
Vermont follows the Revised Uniform Fiduciary Access to Digital Assets Act to ensure that testators can retain control of their digital property and plan for its ultimate disposition.
Vermont does not impose an inheritance tax.
Credit Estate Tax
Beginning in 2020, Vermont imposes an estate tax with an exemption amount of $4,250,000. Effective January 1, 2021, and after that, the estate tax exemption increases to $5,000,000. The top tax rate remains 16%.
Before 2020, Vermont imposed an estate tax equal to the maximum credit permitted for paid state and inheritance taxes under the federal tax code in effect on January 1, 2001. The exemption amount was $2,750,000.
Generation-Skipping Transfer Tax (G.S.T. Tax)
Vermont imposes a G.S.T. tax equal to the maximum credit permitted for paid G.S.T. tax under the federal code in effect on January 1, 2001.
Vermont does not impose a gift tax.