A Vermont living trust holds ownership of your assets during your life while you continue to use and control them. Assets are then passed to beneficiaries after your death. A revocable living trust (sometimes called an inter vivos trust) can offer a variety of benefits.
Living Trusts in Vermont
When you create a living trust in Vermont, you are the trust’s grantor, and you place your assets into the ownership of the trust, where they are managed for your benefit during your lifetime. The more assets you can place in the trust, the more you can benefit from the protections it offers. Some assets cannot be placed in trust, such as life insurance or retirement benefits. You need to select a trustee who will manage the trust. It can be anyone, but common practice is to name yourself. A successor trustee is also named to step in after your death. He or she will continue to manage the assets and will also distribute them to your beneficiaries according to your instructions. When you set up a revocable trust you have the power to make changes to it or eliminate it at any time. An irrevocable living trust cannot be changed.
One of the primary benefits of a living trust Vermont is that it keeps your assets out of probate. Probate is the court process through which a will is verified and put into force. Probate is a lengthy process that can take months and since Vermont does not use the Uniform Probate Code, its procedures are not streamlined. Probate also involves the costs of an attorney, executor, and court fees. When you pass your assets through a will, they cannot be disbursed to your beneficiaries until probate concludes. When you use a trust, assets can pass immediately if you wish and there is no court oversight or fees. A living trust allows you to avoid probate in any state in which you own property, as long as you include that property in your trust.
If your estate is worth less than $10,000 at your death, it is eligible for a small estate procedure which is much quicker and less expensive than probate. This is also less expensive than a trust and may be a better option for someone with a very small estate.
Do I Need a Living Trust in Vermont?
A living trust in Vermont can be a useful estate planning tool. One of the reasons to use a trust is to obtain privacy for your transactions. Wills go through probate and become public record. Trusts remain private. The assets, beneficiaries, and disbursements are not made public. Trusts are also more difficult to contest than wills, ensuring your plan will be followed.
Your revocable living trust protects you should you become mentally incapacitated. All of your assets are already controlled, owned, and managed by the trust and a conservatorship proceeding is likely unnecessary. While a durable power of attorney can be rejected, a trust cannot be. Your financial life is protected by the trust.
Living trusts offer control over your assets in life and in death. During your lifetime, the trust owns the assets, but you control the trust. You use your assets as you normally would and nothing in your daily life changes. You can give assets away or take them out of the trust as you please. After your death, the assets are handled according to your instructions. They are managed by the trust and passed to your beneficiaries at the dates you select (it is common to choose beneficiaries’ birthdays to ensure they are mature enough). If you use a will, assets are passed as soon as probate concludes.
Living Trusts and Estate Taxes in Vermont
Your living trust will not reduce your estate tax liability, but you may not have any to begin with. Estates worth less than $2.75 million are not taxed by Vermont and estates under $5 million are not taxed by the federal government. If you are concerned about estate tax, you can consider a special type of trust called a marital trust (also known as an AB trust or QTIP trust) which transfers assets from a deceased spouse to a surviving spouse with no estate tax. Living trusts are not shielded from Medicaid spend down, nor are they protected from creditors.
How to Create a Living Trust in Vermont
When creating a living trust in Vermont, you sign your written trust document before a notary public. The trust is not in effect until you transfer ownership of assets into it. A living trust can provide the flexibility and control you want now and in the future. Weigh all the options before making a decision.
LegalZoom can help you create a living trust online. Start by answering a few simple questions; LegalZoom will review your answers and send your complete living trust package to you by mail.