Vermont Wills vs. Trusts
Navigating Vermont estate planning doesn’t have to be overwhelming. The Green Mountain State offers unique estate planning features including enhanced life estate deeds (Lady Bird deeds), transfer-on-death vehicle titles, and specialized trust protectors. With Vermont’s state estate tax exemption of $5 million and simplified probate for small estates under $45,000, understanding the unique differences between wills and trusts can save your family significant time, money, and stress while preserving your legacy.
Table of Contents
US Map For The Different Will and Trust Requirements by State
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Vermont Will Requirements
A Vermont Last Will and Testament should include:
- Age and Capacity: Testator must be “of sound mind” and at least 18 years old (or an emancipated minor)
- Format: Must be in writing
- Signature: Must be signed by the testator (or on the testator’s behalf by another person in the testator’s presence at the testator’s direction)
- Witnesses: Must be signed by at least two credible witnesses who must subscribe the will in the presence of the testator and each other
Witness Requirements
For Vermont wills:
- Though it is generally preferable for a will’s witnesses to have no interest in the testator’s estate, an interested witness does not render a Vermont will invalid
- However, a provision in favor of a witness (or a witness’s spouse) is voidable unless the will has at least two other disinterested witnesses
- An instruction to pay an existing debt from the testator’s estate is valid even if the creditor being paid is one of the will’s witnesses
Self-Proved Wills
Vermont law does not require a will to be notarized, though a Vermont will can be made “self-proved” through execution of a notarized affidavit:
- The affidavit must be executed by the testator and the will’s witnesses
- Self-proved wills can be admitted to probate based upon the affidavit and without the need for witness testimony
- The Vermont General Assembly enumerates the requirements for self-proved affidavits within 14 Vt. Stat. §108
Limitations on Will Provisions
- To the extent a will does not fully dispose of a decedent’s entire estate, Vermont law recognizes a testator’s right to restrict a potential heir’s right to inherit estate property through intestate succession
- A Vermont will may not, however, disinherit a surviving spouse by restricting the spouse’s right to an elective share in the testator’s estate
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Amendment, Revision, and Revocation of Vermont Wills
Revoking a Vermont Will
A Vermont will can be revoked in whole or in part by:
- A “revocatory act” performed with the intent to revoke the will, such as destruction of some or all of the document by burning, tearing, canceling, or obliterating
- A revocatory act may be performed by the testator or by someone else acting at the testator’s direction while in the testator’s conscious presence
- Executing a subsequent will that either expressly declares that the prior will is revoked or includes provisions inconsistent with the prior will
Effect of Later Wills
Automatic Revocation by Divorce
Children Born After Will Execution
If a child of a Vermont testator is born after the testator executes a will:
- The after-born child—if omitted from the will—is entitled to an interest in the estate as if the testator had died without a will
- An after-born child’s share is inapplicable if it is apparent from the will that the testator intended not to provide for an after-born child
Children Omitted from Will
If a child already born when the will was executed is omitted from the will, the omitted child is entitled to an intestate share in the estate if it can be shown that the omission resulted from a mistake or accident.
Holographic and Oral Wills
Holographic Wills
Vermont law does not recognize handwritten (or “holographic”) wills. A will signed and written in the testator’s handwriting may be valid if it is signed by two witnesses and otherwise satisfies all requirements for Vermont wills.
Oral (Nuncupative) Wills
Vermont no longer recognizes oral (or “nuncupative”) wills—which were previously valid to pass up to $200.00 in personal property.
Military Wills
Vermont expressly recognizes the validity of military wills created by servicemembers under federal law. A military will that meets the standards prescribed by federal law is valid in Vermont, even if the will does not observe all of Vermont’s formalities.
Vermont Trust Requirements
Vermont trusts are primarily governed by the Vermont Trust Code, enacted by the General Assembly as Title 14A of the Vermont Statutes (14 Vt. Stat §101, et. seq.).
Requirements for a Valid Vermont Trust
For a trust to be valid under Vermont law:
- A Vermont trust may be created to serve any purpose that is lawful, possible to achieve, and not contrary to Vermont’s public policy
- A Vermont trust and its terms must be for its beneficiaries’ benefit
- The settlor must express an intent to create the trust and have adequate capacity
- Capacity is measured under the same standard applying to wills, and a settlor is deemed to have capacity if an agent of the settlor creates a trust under a power-of-attorney created when the settlor had capacity
- A Vermont trust is void to the extent its creation was induced through fraud, duress, or undue influence
Oral Trusts
Required Trust Elements
Vermont trusts must have:
- A definite beneficiary or a beneficiary ascertainable now or in the future—subject to exceptions such as for charitable trusts, trusts for the care of animals, and certain noncharitable trusts
- A trustee with actual duties to perform
Trustee Responsibilities
A trustee of a Vermont trust must:
- Act in good faith—administering the trust in accordance with its terms and purpose and the beneficiaries’ interests
- Act as a fiduciary and must act prudently and avoid self-dealing
- Follow the “prudent investor rule” when investing and managing trust assets, acting prudently in consideration of the purposes, terms, distribution requirements, and other circumstances of the trust
A trust instrument may expand, restrict, eliminate, or otherwise modify application of the prudent investor rule.
Trust Protectors and Advisors
The Vermont Trust Code authorizes—but does not require—appointment of a “trust protector” or “trust advisor.” A trust protector or trust advisor is a person granted specific powers in relation to a trust. Such powers could include—for example—the power to:
- Appoint or remove a trustee
- Modify the trust for tax advantages or in response to changes in law
- Adjust or consent to distributions
- Advise the trustee relating to beneficiaries or investment of trust assets
Trust Creation Methods
Vermont trusts may be formed by:
- A settlor’s transfer of property (either during life or through a will or other testamentary provision) to a trustee or to a trust in the trust’s name
- A property owner’s declaration that the owner holds the property as trustee
- Through the exercise of a power of appointment in favor of a trustee
- Pursuant to a statute or a court’s judgment or decree
- By an agent acting under a power-of-attorney authorizing creation of trusts
Trust Revocability
Revocation or Amendment Methods
A settlor revokes or amends a revocable trust:
- Using the method specified in the trust instrument
- Or, if the trust instrument does not specify a method, the settlor can revoke or amend the trust through a later will or codicil or another method providing clear and convincing evidence of the intent to revoke or amend the trust
Trust Termination
Vermont trusts terminate upon:
- Expiration or revocation under the trust’s own terms
- When no purpose of the trust remains to be achieved
- When the trust’s purpose has become unlawful, contrary to public policy, or impossible to achieve
Under appropriate circumstances, a court may modify or terminate a Vermont irrevocable trust upon the petition of the settlor, trustee and/or beneficiaries. A probate court may modify an irrevocable trust to conform to the settlor’s intentions or to achieve the settlor’s tax objectives.
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Special Considerations
Estate Taxes
State Estate Tax
Vermont does not assess an inheritance tax but is among the relatively small minority of states that charge estate taxes on wealthy estates:
- Vermont’s estate tax applies to estates of decedent Vermont residents and assets owned in Vermont by non-residents
- Vermont’s estate-tax exemption amount (the minimum value before an estate qualifies for the tax) is $5.0 million—less than half the federal exemption of $13.9 million
- Vermont estates that do not qualify for federal estate tax may still owe estate tax to Vermont
- Vermont assesses its estate tax at a flat rate of 16% on asset value in excess of the exemption
- Unlike the federal counterpart, Vermont’s estate tax does not allow for portability of estate-tax exemptions between spouses
Simplified Probate
Small Estate Procedures
Vermont law authorizes a simplified small-estate administration process that streamlines probate for qualifying estates:
- To qualify for small-estates probate, an estate must include no real property, and the value of personal property must not exceed $45,000
- An interested person requests small-estate probate by filing with the probate court a petition with the necessary information and attachments
- If approved, the estate’s representative can resolve creditor claims, distribute assets, and close the estate with substantially less formality than the full probate process
Non-Probate Transfers
Transfer-on-Death (TOD) Deeds and Vehicle Titles
No TOD Real Estate Deeds
Vermont is not among the states that authorize TOD designations on real estate deeds.
Enhanced Life Estate Deeds
Vermont is one of the handful of states that recognize “enhanced life estate deeds” (also called “Ladybird deeds”)—which serve a purpose similar to TOD deeds:
- A property owner who executes a Ladybird deed reserves a life estate interest in the property and grants a contingent remainder interest transferring the property to another person when the current owner dies
- Unlike with traditional life estates, the holder of the contingent remainder interest acquires no vested rights in the property during the grantor’s lifetime
- An owner who reserves an enhanced life estate retains the right to sell, transfer, or mortgage the property during life or to revoke the Ladybird deed
TOD Vehicle Titles
Vermont law authorizes TOD designations on titles to Vermont-registered vehicles:
- When a TOD designation is added to a vehicle title, ownership of the vehicle automatically transfers to the named beneficiary upon the owner’s death—allowing the vehicle to bypass probate
- The beneficiary does not acquire any present rights in the vehicle until the owner’s death actually occurs
Vermont Spendthrift Trusts
Creditor Protection Through Trusts
Although the general rule is that creditors of a trust’s beneficiaries may attach a beneficiary’s interest in a trust with court approval, Vermont law recognizes “spendthrift trusts”:
- Assets held in a spendthrift trust cannot be reached by most creditors of beneficiaries until actually distributed to the beneficiary
- Vermont spendthrift trusts do not protect against attachment to satisfy child support obligations, governmental claims, or claims arising from services provided to protect the beneficiary’s interest in the trust
Settlor Creditor Rights
- Creditors of a revocable trust’s settlor can attach trust assets as long as the settlor remains living (or, upon death, through estate claims)
- If a Vermont trust is irrevocable, the settlor’s creditors can attach the amount of trust assets that could be distributed for the settlor’s benefit—except that wealth in an irrevocable special needs trust is protected from attachment
Need help creating the right estate plan for your Vermont family?
Our estate planning specialists can help you navigate Vermont’s unique laws and create a personalized strategy.
Wills vs. Trusts: Comparison
| Feature | Wills | Trusts |
|---|---|---|
| When It Takes Effect | After death | Can be immediate (living trust) or after death (testamentary trust) |
| Probate Process | Requires probate | Assets in trust avoid probate |
| Privacy | Public record | Generally private |
| Challenges | Can be challenged in probate court | More difficult to challenge |
| Cost to Create | Generally less expensive | Usually more expensive |
| Ongoing Administration | None until death | May require ongoing management |
| Protection During Incapacity | None (requires separate power of attorney) | Can provide management if grantor becomes incapacitated |
| Vermont Special Feature | Simplified probate for estates under $45,000 without real property | Trust protectors/advisors; presumed revocable; oral trusts recognized |
Conclusion
Creating a will or trust does not have to be difficult or intimidating for Vermont residents. However, certain circumstances—like second marriages, stepchildren, aging parents, special needs beneficiaries, guardianships, and business interests—can add complexity and result in unforeseen consequences.
Vermont offers unique estate planning tools including enhanced life estate deeds (Lady Bird deeds), transfer-on-death vehicle titles, and specialized trust protectors. The state’s $5 million estate tax exemption makes tax planning particularly important for high-net-worth individuals. While Vermont does not recognize holographic wills or incorporation by reference in wills, its simplified probate process for small estates under $45,000 provides an important option for families with modest estates.
When any out-of-the-ordinary issues are present, it’s advisable to consult with an experienced attorney familiar with and licensed under Vermont law to ensure your estate plan takes full advantage of the state’s provisions while avoiding potential pitfalls.
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FAQs: Vermont Wills and Trusts
Q: What are the requirements for a valid will in Vermont?
A: A valid Vermont will must be in writing, signed by the testator (who must be at least 18 or an emancipated minor and of sound mind), and signed by at least two credible witnesses who must sign in the presence of the testator and each other. Vermont does not recognize holographic (handwritten but unwitnessed) wills. While a will doesn’t need to be notarized, it can be made “self-proved” through a notarized affidavit executed by the testator and witnesses, which allows the will to be admitted to probate without witness testimony.
Q: Does Vermont have estate taxes?
A: Yes, Vermont is one of the few states that collects estate taxes. For 2021, Vermont imposes a 16% flat estate tax on estates with a value exceeding $5 million. This exemption amount is significantly lower than the federal estate tax exemption ($13.9 million in 2025), meaning that estates too small to trigger federal estate tax may still owe Vermont estate tax. Unlike the federal exemption, Vermont doesn’t allow portability of unused exemptions between spouses. Vermont does not, however, impose an inheritance tax on beneficiaries.
Q: What is a Lady Bird Deed (Enhanced Life Estate Deed) in Vermont?
A: A Lady Bird Deed, also called an Enhanced Life Estate Deed, is a special type of deed recognized in Vermont that allows a property owner to transfer real estate to beneficiaries upon death while maintaining complete control during their lifetime. Unlike traditional life estate deeds, the property owner retains the right to sell, mortgage, or even revoke the deed without the beneficiary’s consent. These deeds function similarly to transfer-on-death deeds (which Vermont doesn’t formally recognize) and help avoid probate for real estate while potentially preserving Medicaid eligibility.
Q: Can I incorporate a personal property list into my Vermont will?
A: Unlike most states, Vermont’s probate laws do not authorize wills to incorporate other documents by reference, such as personal property memoranda. While an executor may choose to honor such a list as a moral obligation, it is not legally binding under Vermont law unless the list itself complies with all the formalities required for a will or codicil (including being signed by the testator and two witnesses). For effective distribution of personal items, you’ll need to either include them directly in your will or use a revocable living trust with more flexible provisions.
Q: What is a trust protector or trust advisor in Vermont?
A: Vermont’s Trust Code specifically authorizes the appointment of “trust protectors” or “trust advisors” – individuals granted specific powers over a trust. These powers can include appointing or removing trustees, modifying the trust for tax advantages or in response to legal changes, adjusting distributions, or advising trustees about beneficiaries or investments. This feature adds flexibility to trust administration and provides a way to address changing circumstances without court intervention. While not required, trust protectors can be particularly valuable for long-term trusts where adaptation to future changes may be necessary.
Q: Can I avoid probate with a small estate in Vermont?
A: Yes, Vermont offers a simplified small-estate administration process for estates that include no real property and personal property valued at $45,000 or less. An interested person can file a petition with the probate court, and if approved, the estate’s representative can resolve creditor claims, distribute assets, and close the estate with substantially less formality than the full probate process. For larger estates or those containing real estate, consider other probate-avoidance strategies like living trusts, enhanced life estate deeds, or joint ownership arrangements.
Q: How are surviving spouses protected under Vermont law?
A: Vermont provides strong protections for surviving spouses through an elective share right of one-half of the probate estate after deducting allowances, claims, and administrative expenses. This right exists regardless of what the deceased spouse’s will provides and can only be waived through a valid pre- or post-nuptial agreement. If there’s no will, a spouse receives the entire estate if the decedent had no descendants or if all descendants are also the spouse’s descendants. If the deceased spouse has children from another relationship, the surviving spouse receives one-half of the net estate. Vermont law also voids property transfers designed to defeat a spouse’s elective share rights.
