Estate planning in Vermont involves the management and distribution of your real and personal property upon your death or if you should become mentally incapacitated. You may also have documents drafted to ensure the care and financial support of your children and others as well as those containing your wishes regarding life-prolonging measures if you become incapacitated.
Making a Will
A will states your intent on how you want to arrange the distribution of your property on your passing. It can be revoked or modified during your lifetime. If you die intestate, or without a will, the state of Vermont will appoint an administrator and distribute your assets according to the state’s succession laws that may not be as you intended.
A will should include the following:
- Property distribution
- Provisions for children
- Executor to administer the estate
- A trust if applicable
Probate is the judicial process that determines your will’s validity, inventories your estate, and transfers the estate’s assets to your heirs once all taxes and debts are paid. Even with a will and other planning tools, probate may not be avoided completely, especially in large estates, but there are ways to dispose of assets during your lifetime to avoid probate, including:
- Living trusts: Holds nearly any kind of property in a trust while allowing you as trustee to continue to control your assets. It becomes irrevocable on your death, when it is managed by your appointed successor trustee.
- Joint ownership: Joint ownership of real or personal property with a right of survivorship allows title to automatically pass to the surviving joint owner on your death.
- Payable or transfer-on-death designations: A bank account or stocks and bonds may have a POD or payable-on-death designation or transfer-on-death designations that will transfer rights to the accounts on your death.
- Irrevocable life insurance trust: Transferring ownership of a life insurance policy to a trust can reduce the value of your estate, but you lose control and cannot change the beneficiary.
- Probate exemptions: Vermont simplifies probate for personal estates valued at $10,000 or less with no real property. If burial expenses are paid, the executor may be discharged without any further accounting.
Financial Power of Attorney
This instrument appoints someone to handle your financial affairs. A durable power of attorney means it takes effect immediately and continues if you become incapacitated. You may also limit your agent’s power or designate it as a “springing” durable power of attorney making it effective only upon a physician’s certification of your mental incapacity.
Health Care and End-of-Life Decisions
- A living will, also known as a health care directive, sets forth your intentions regarding end-of-life health measures.
- A Power of Attorney for Health Care delegates power to a trusted individual to make critical decisions about your health care when you are mentally incapable.
Forms for Vermont health care directives are available online for a fee or may be obtained at hospitals or health care facilities. You can modify these by destroying the old one and creating a new one.
Additional Planning Considerations
Most individuals should have some of the above plans for distributing their estates, but there are other considerations:
- Only very large estates valued at $5.25 million for 2013 are subject to federal estate taxes. Vermont has a limited estate tax.
- Life insurance can provide a valuable financial cushion if your children, spouse or other dependents need support in the long term. If you have other sources of benefits like a pension, group life insurance or large IRA, insurance may be an unneeded expense.
- An irrevocable trust allows you to transfer your home to your children and results in a minimal taxable gift. You may continue to live in the home for a set period before it goes to your children without incurring any additional estate or gift taxes.
State and federal estate laws are constantly evolving. Speak with a estate planning lawyer in Vermont to ensure your assets and personal medical and financial affairs are managed according to your intentions.