Vermont Living Trust

Introduction

Key Things to Know

1. 1

   Vermont's sharpest planning fact: 14 V.S.A. Section 319 caps the surviving spouse's elective share at one-half of the probate estate only, with no augmented-estate concept. Because a funded revocable trust holds assets outside the probate estate, it falls outside the elective share entirely, unless the spouse proves under Section 321 that the trust was created 'for the primary purpose of defeating' that right. Most other states pull trust assets back into an augmented estate regardless of intent; Vermont does not.

2. 2

   No notary or witness is required to create a Vermont living trust. 14A V.S.A. Section 402 requires only settlor capacity, indicated intent, a definite beneficiary, and a trustee with duties to perform, and Section 407 will even enforce a purely oral trust on clear and convincing evidence. But the certificate of trust a trustee later signs to prove authority to a bank or title company must be sworn under oath before a notary public, under Section 1013(a), a stricter, non-uniform requirement most states enacting the Uniform Trust Code do not impose.

3. 3

   Funding Vermont real estate into the trust means recording the deed with the clerk of the town where the land lies, not a county recorder, since Vermont has no county-level land recording office (27 V.S.A. Section 341(a)); an estate spanning several towns means multiple separate recordings. Deeding your own home into your own revocable trust, where you remain sole beneficiary, is exempt from Vermont's Property Transfer Tax as a mere change in the form of ownership (32 V.S.A. Section 9603(6)).

4. 4

   Vermont has two separate homestead concepts. The property-tax homestead declaration explicitly addresses trust ownership: a dwelling held in trust keeps the reduced homestead education tax rate only if the claimant is the sole beneficiary and the claimant or spouse was the grantor of a revocable trust (32 V.S.A. Section 6062(e)). Whether the separate $125,000 (a fixed statutory figure) creditor exemption at 27 V.S.A. Section 101 survives deeding the home into that same trust is not addressed by the statute; confirm both points with a Vermont attorney before funding your home.

5. 5

   Vermont is not a community property state; marital property is divided by equitable distribution only upon divorce. A non-uniform Vermont addition, 14A V.S.A. Section 505(c), lets married couples convey tenancy-by-entirety real estate into a joint or mirror-separate revocable trust and keep the entireties creditor immunity, provided the trust meets the section's conditions; that immunity ends if the marriage is later dissolved by a court.

6. 6

   An ordinary Vermont revocable living trust gives zero protection from your own creditors while you are alive: 14A V.S.A. Section 505(a)(1)-(2) subjects a revocable trust's assets to the settlor's creditors during life, and Vermont has no self-settled asset protection trust statute. A revocable trust also gives no state estate tax advantage; Vermont taxes estates of $5,000,000 or more at a flat 16% of the excess, with no portability between spouses, and a revocable trust's assets remain part of the taxable estate (32 V.S.A. Section 7442a).

7. 7

   Vermont has no trust registration statute; a settlor files nothing with any court to create or maintain a living trust. There is no automatic court supervision, accounting, or bond requirement unless the Probate Division of the Superior Court finds one necessary (14A V.S.A. Sections 201(b), 702(a)). After the settlor's death, general probate claims rules apply: creditors must present claims within four months of published notice, or one year if none was published (14 V.S.A. Section 1203).

Vermont Requirements for Living Trust

• Vermont Notarized Certificate of Trust

  14A V.S.A. Section 1013(a) requires the trustee's signature on a certificate of trust to be sworn under oath before a notary public or other official authorized to administer oaths, a stricter, non-uniform requirement most Uniform Trust Code states do not impose.

• Vermont Town Clerk Recording for Trust-Funding Deeds

  A deed conveying Vermont real property to the trustee must be acknowledged before a notary and recorded at length in the clerk's office of the town where the land lies, not a county office, since Vermont has no county-level land recording system (27 V.S.A. Section 341(a)).

• Vermont Elective Share Limited to the Probate Estate

  14 V.S.A. Section 319 caps the surviving spouse's elective share at one-half of the probate estate only, with no augmented-estate concept, so a funded revocable trust falls outside it unless the spouse proves under Section 321 that it was created to defeat that right.

• Vermont Dual Homestead Rules for Trust-Held Property

  The property-tax homestead declaration (32 V.S.A. Section 6062(e)) lets a trust-held dwelling keep the reduced homestead rate only if the claimant is the sole beneficiary and the claimant or spouse was the grantor of a revocable trust. Whether the separate creditor exemption at 27 V.S.A. Section 101 survives that transfer is not addressed by statute.

• Vermont Tenancy-by-Entirety Trust Protection for Married Settlors

  14A V.S.A. Section 505(c) lets married settlors convey tenancy-by-entirety real estate into a joint or mirror-separate revocable or irrevocable trust while keeping the entireties creditor immunity, ending only if the marriage is later dissolved by a court.

• Vermont Property Transfer Tax Exemption for Self-Settled Funding

  32 V.S.A. Section 9603(6) exempts a deed conveying a settlor's own property into that settlor's own revocable trust from the Vermont Property Transfer Tax, as a mere change in the form of ownership with no change in beneficial ownership.

• Vermont Estate Tax Threshold and Rate

  Vermont taxes estates of $5,000,000 or more at a flat 16% of the excess over that threshold, with no portability between spouses (32 V.S.A. Section 7442a). A revocable living trust's assets remain includible in the taxable estate and receive no state estate tax reduction.