First Light / Vermont Estate Planning
Estate Planning in Vermont
Vermont imposes a state estate tax on estates exceeding approximately $5 million, with rates up to 16%. The exemption is not portable between spouses — a critical gap that requires proactive trust planning for married couples. Combined with strict will execution requirements and no holographic will recognition, Vermont rewards careful estate planning.
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Last updated: April 2026
What most people don't know about Vermont
Vermont's state estate tax applies to the entire taxable estate above the exemption — not just the excess. While this sounds like a technical distinction, it means a Vermont estate worth $5.1 million doesn't just pay tax on the $100,000 above the exemption. The tax is calculated on the full $5.1 million using a graduated rate schedule, with a credit applied for the exempt amount. This can create a significant tax cliff where estates just above the exemption face a disproportionately large tax bill relative to the amount by which they exceed the threshold.
Source: 32 V.S.A. § 7442a
Plain English Rules
- •A will must be signed by two witnesses — holographic wills are not valid in Vermont
- •Vermont imposes a state estate tax on estates exceeding approximately $5 million, with rates up to 16%
- •The estate tax exemption is not portable between spouses
- •The surviving spouse has a right to waive the will and take a statutory elective share
- •A durable power of attorney must explicitly state it survives incapacity
- •Small estates under $10,000 may qualify for simplified administration
What Actually Breaks
Will without two witnesses
Invalid — Vermont does not recognize holographic wills
Married couple relies on federal portability for state tax
Vermont exemption not portable — potential state tax on first death
POA lacks durability language
Authority terminates at incapacity
No will in blended family
Spouse receives statutory share; children from prior marriage may inherit less than intended
No healthcare directive
Family disagreement on treatment
Self-proving affidavit omitted
Witnesses must testify in probate court
If This Is Your Situation
Married with children, estate above $5M
Vermont estate tax applies — credit shelter trust essential to preserve both exemptions
Married with shared children, estate under $5M
No state estate tax; spouse inherits entire estate under intestacy
Estate under $10,000
Small estate process available
Single with minor children
Court decides guardianship without a will
Significant real estate appreciation
Vermont property values may push estates above the $5M threshold
At a Glance
| Will witnesses | 2 required |
| Why it matters | Must sign in testator's presence and in each other's presence |
| Notarization required | Not required |
| Notarization note | Self-proving affidavit available |
| Self-proving affidavit | Allowed and recommended |
| Durable POA | Recognized |
| POA note | Must include durability language under Vermont Uniform Power of Attorney Act |
| Healthcare directive | Recognized |
| Directive note | Advance directive under 18 V.S.A. Chapter 231 |
| Probate timeline | Typically 6–18 months |
| Probate filing fees | Typically $150–$300 |
| Small estate threshold | $10,000 (small estate affidavit) |
How Vermont Actually Works
Vermont follows stricter execution requirements than UPC states. Wills must be written and witnessed by two competent people who sign in each other's presence — holographic wills are not recognized. This makes proper execution essential for Vermont residents.
The state's estate tax is the feature that most affects planning decisions. With an exemption of approximately $5 million (indexed for inflation), Vermont's threshold is well below the federal exemption. Estates above this amount face state tax rates up to 16%. Critically, the exemption is not portable between spouses — meaning a married couple can only shelter one exemption without proactive trust planning.
For couples whose combined estates approach the threshold, a credit shelter or bypass trust is essential. This trust holds assets up to the exemption amount at the first spouse's death, preserving both exemptions and potentially saving significant tax. Without this planning, the first spouse's exemption is wasted.
Vermont consolidated its probate courts into the Superior Court system, creating the Probate Division. This streamlined the court structure but probate still follows traditional procedures. For small estates under $10,000, simplified processes are available.
The practical message for Vermont residents: execute your will properly with two witnesses and a self-proving affidavit, include durability language in your POA, and if you're married with a combined estate anywhere near $5 million, get trust-based tax planning in place.
Without a Will: How Vermont Distributes Your Estate
Vermont follows common law property rules. When someone dies without a will, state intestacy law determines who inherits — and the result depends on your family structure.
Vermont follows common law property rules. When someone dies without a will, the distribution depends on family structure — primarily whether the decedent was married and whether children survive.
The surviving spouse has a right to elect against the will and take a statutory share, but under intestacy, the distribution follows a defined hierarchy starting with the spouse and children.
Married with children (same marriage)
Spouse inherits the entire estate if all children are also children of the surviving spouse.
Married with children from a prior relationship
Spouse receives one-third of the personal property and a life estate in one-third of the real property. Children inherit the balance outright and the remainder interest in the real property.
Married, no children
Spouse inherits the entire estate if no descendants, parents, or siblings survive. If parents survive, spouse receives $25,000 plus one-half of the balance.
Single with children
Children inherit equally.
Single, no children
Parents, then siblings, then more distant relatives.
Survival period: 120 hours (5 days)
Vermont's intestacy distribution for spouses with children gives a relatively small share compared to UPC states. The life estate in real property (rather than outright ownership) can create management complications.
Wills in Vermont
What makes a will valid
Written will signed by testator and two witnesses in each other's presence.
What people think
That a handwritten will is valid or that federal portability applies to Vermont estate tax.
What actually happens
Holographic wills are not valid. Vermont estate tax exemption is not portable.
Common failure
Missing witnesses or relying on federal portability for state tax planning.
When a trust is better
Essential for married couples near the $5M estate tax threshold. Credit shelter trusts preserve both exemptions.
Power of Attorney in Vermont
What it does
Grants financial management authority.
Key rule
Must include durability language under Vermont UPOAA.
Real-world friction
Institutions may reject outdated forms.
Common mistake
Omitting durability language.
Healthcare Directive in Vermont
What it covers
Treatment preferences and healthcare agent.
What's different
Vermont's advance directive framework under 18 V.S.A. Chapter 231.
Execution requirements
Must be signed by principal with two witnesses.
Common misunderstanding
Confusing financial and healthcare POAs.
Probate in Vermont
When required
Assets in decedent's name without beneficiary designations.
What makes Vermont different
Probate handled by Superior Court probate division. State estate tax at relatively moderate threshold (~$5M). Strict execution requirements.
Probate paths
Full administration· 6–18 months
Standard probate.
Small estate· 30–90 days
Estates under $10,000.
What people get wrong
Assuming Vermont estate tax exemption is portable. It's not.
Trusts in Vermont
When a trust is useful
Married couples near estate tax threshold. Probate avoidance. Privacy.
When a trust is unnecessary
Very small estates or single individuals well below threshold.
Key mistake
Assuming trust avoids estate tax — it avoids probate only. Trust assets count toward taxable estate.
Common Mistakes
Assuming Vermont estate tax portability
Vermont exemption is not portable. Without trust planning, married couples shelter only one exemption.
Signing will without two witnesses
Holographic wills not valid. Two witnesses required.
POA without durability language
Terminates at incapacity.
Assuming trust avoids estate tax
Trust assets are included in taxable estate.
Not updating after divorce
Will provisions revoked but beneficiary designations may not be.
What Most People Actually Need
Most people don't need a trust. They need a valid will, a durable power of attorney, and a healthcare directive — executed correctly under Vermont law. The most common mistakes are ones of execution, not planning.
Check your situation →Frequently Asked Questions
Does Vermont have an estate tax?›
Yes. Vermont imposes a state estate tax on estates exceeding approximately $5 million (indexed for inflation). Rates range up to 16%. The exemption is not portable between spouses.
Are holographic wills valid in Vermont?›
No. Vermont requires two witnesses for a valid will.
What happens if you die without a will?›
Vermont intestacy law distributes assets based on family structure. Spouse generally inherits the entire estate if all children are shared.
What is the small estate threshold?›
$10,000. Simplified process available for very small estates.
Is the Vermont estate tax exemption portable?›
No. Unlike the federal exemption, Vermont's cannot be transferred to a surviving spouse. Trust planning is needed to preserve both exemptions.
Can a trust avoid Vermont estate tax?›
A revocable trust avoids probate but not estate tax. However, a credit shelter or bypass trust can preserve both spouses' exemptions.
Primary Sources
- Vermont Statutes (Wills) 14 V.S.A. § 5 ↗
- Vermont Estate Tax 32 V.S.A. § 7442a ↗
- Vermont Intestacy 14 V.S.A. § 551 ↗
- Vermont Trust Code 14A V.S.A. ↗
- Vermont Advance Directives 18 V.S.A. § 9701 ↗
- Vermont POA 14 V.S.A. § 3501 ↗
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This page is for informational purposes only and does not constitute legal advice. Vermont law is subject to change. Verify current statutes and consult a licensed attorney for your specific situation. Last updated: April 2026.