Vermont

Vermont estates are heard in the Probate Division of the Superior Court, which sits in each
county. Vermont keeps its own statutory scheme rather than adopting the Uniform Probate Code, so
procedures differ from most of its neighbours.

The Vermont estate tax

Vermont levies its own estate tax, with an exclusion of $5 million. Value above that is taxed
at a flat 16% — there is no graduated band, so an estate that crosses the line does so at the
top rate immediately on the excess.

Five million is high enough that most Vermont estates never encounter it, but low enough that a
family with a working farm, a house and a second property can be caught. Vermont's exclusion is
not portable between spouses in the federal sense, so a couple close to the threshold should
take advice rather than assume the survivor inherits the unused amount. Confirm current figures
with the Department of Taxes.

There is no Vermont inheritance tax.

What the executor must do

Publish and mail the notice to creditors, file an inventory, pay the debts and the final income
tax returns, and file an accounting for the Probate Division to approve before distribution.

Land use is a trap on sale

A great deal of Vermont land is enrolled in the current use programme, which taxes farm and
forest land at its use value rather than its market value. Taking land out of the programme —
including, in some circumstances, on a sale or a change of use — triggers a land use change
tax. An executor who sells enrolled land without checking can hand the estate an unexpected bill.

Before distributing

Let the creditor period run, settle the returns, and obtain the court's approval.

Under 14 V.S.A. § 5 a Vermont will must be in writing, signed by the testator, and
attested and subscribed by two or more credible witnesses who sign in the testator's presence.
The testator must be 18 or older and of sound mind.

Vermont does not recognise holographic wills

There is no holographic provision anywhere in Vermont's wills statute. A handwritten will is
perfectly acceptable provided two witnesses signed it — but unwitnessed, it is not valid in
Vermont, however clearly it expresses what the person wanted.

Vermont is stricter here than Maine on one side, which accepts holographic wills, and New
Hampshire on the other is the same as Vermont. A will made elsewhere in New England is worth
checking after a move.

Make it self-proving

Attach a self-proving affidavit before a notary, so no witness need be located after the death.

Deal with the camp and the land

Two Vermont-specific points belong in the drafting conversation:

• A camp, ski place or second home that several children want and none can buy out is the
  recurring Vermont estate dispute. Solve it in the will — an entity with a written cost-sharing
  agreement, a right of first refusal, or cash to equalise — rather than leaving it to the
  executor.
• If land is enrolled in current use, say what should happen to it. An heir who wants to keep
  farming and an heir who wants to sell have directly opposed interests, and the land use change
  tax falls on whoever triggers it.

Also

• Name an alternate executor and consider waiving bond.
• A surviving spouse has statutory rights whatever the will says.
• Review after a marriage, divorce, birth or a move to Vermont.

Yes. A Vermont executor is entitled to reasonable compensation for services rendered.
Vermont prescribes no statutory percentage.

What "reasonable" turns on

The size and nature of the estate, the time actually spent, the responsibility assumed, the skill
the work required, the difficulty of the problems encountered, and the results achieved. The
Probate Division assesses it on the accounting.

Records decide it

With no schedule to point at, contemporaneous time records are the argument. Dated entries from
the first week showing what was done and how long it took. Vermont's Probate Divisions review the
accounting as a matter of course, so the figure will be read by someone.

How it is approved

Compensation is claimed on the accounting and allowed by the Probate Division, or agreed in writing
by all the beneficiaries. Settle it before taking it.

If the will fixes the figure

A will provision governs where the executor accepts the appointment on those terms. A legacy to the
executor may be intended in place of a fee — read the wording before assuming both are available.

The estate tax angle

Compensation is taxable income to the executor but a deductible administration expense
against the Vermont estate tax.

Because Vermont taxes the excess above $5 million at a flat 16%, the deduction is worth a clean
16 cents in the dollar for a taxable estate — an unusually simple calculation, and a genuinely
material one. For the great majority of Vermont estates, which fall well below the exclusion, there
is no state tax benefit and a family executor who is also a beneficiary usually converts an untaxed
inheritance into taxable income for nothing. Which side of $5 million you are on decides it.

A Vermont executor is reimbursed from the estate for the reasonable expenses of administration,
separately from compensation. They appear on the accounting the Probate Division approves, so
document as you go.

Normally claimable

• Funeral, burial or cremation, the headstone, and a reasonable reception.
• Probate Division filing fees, certified letters, certified death certificates, and publication of
  the notice to creditors.
• Attorney's fees, and accountant's fees for the final Form 1040, any Form 1041, and the Vermont
  estate tax return where one is due.
• Appraisals of real property, farm and forest land, sugarbush and maple operations, timber,
  vehicles and collections.
• Current use programme advice — establishing what land is enrolled and what a sale or transfer
  would trigger. Money well spent, given the size of a land use change tax.
• Carrying costs on estate property until sale: insurance, property tax, utilities, security,
  maintenance, landscaping and snow removal and roof raking.
• Winterising a house or camp — draining lines, keeping heat on, preventing ice dams. An empty
  Vermont property through February is a burst-pipe claim, and prevention costs a fraction of the
  repair.
• Cleaning, clearing, storing, moving and shipping contents.
• Travel on estate business at a reasonable rate.
• Bond premiums where bond was not waived.

Normally not claimable

• The executor's lost wages, meals near home, or personal spending.
• Costs run up for one beneficiary's convenience rather than the estate's.
• Improvements beyond preparing a property for sale as it stands.
• Anything without a receipt.

The rule that decides it

Open an estate bank account and run every payment through it.

Most Vermont estates are administered by a family member working with the county Probate Division.
A bank trust department or an attorney serving as executor earns its cost in specific cases.

Consider a professional when

• Land is enrolled in current use, and a sale or a change of use would trigger a land use
  change tax. This is the Vermont trap, the sums can be significant, and the executor is the one
  who triggers it.
• The estate holds a working farm, a sugarbush, forest land or timber, all of which need
  valuing and, often, keeping in operation through a season.
• A camp or ski property is to be divided among children who all want it — the recurring New
  England problem, and a family executor who is one of the claimants cannot resolve it neutrally.
• The estate is near or above the $5 million exclusion, where the flat 16% rate on the excess
  makes the valuation and deduction decisions worth getting right.
• The named executor lives out of state, which is common given how much Vermont property is
  held by families who live elsewhere, and cannot see to a house through a Vermont winter.
• There is conflict among the beneficiaries, or a beneficiary is a minor or incapacitated.

What it costs

Corporate fiduciaries charge a negotiated percentage with a minimum annual fee that makes small
estates uneconomic. Attorneys generally bill hourly. Because Vermont prescribes no percentage, ask
precisely what the basis will be, in writing.

Middle ground

Appoint a family member, waive bond, and let them retain a Vermont attorney at the estate's
expense — and ask about current use in the first meeting, not after the land is under contract.

A named executor who does not want the job can decline before appointment.