The 12 Most Common Vermont Estate Planning Mistakes — And How to Avoid Every One of Them

The 12 Most Common Vermont Estate Planning Mistakes, and How to Avoid Every One of Them

Estate planning is not a one-time event. It is an ongoing process that must evolve with your life, your family, and the law. Vermont attorneys who handle estates and probate repeatedly see the same preventable mistakes derail even the best of intentions, from a complete failure to plan to technical drafting flaws to the fatally common mistake of creating a trust and then never funding it.

Each mistake below is explained: what it is, why it matters under Vermont law, the specific legal consequence that flows from it with statute citations, and the concrete fix. The governing authorities are Title 14 V.S.A. (Decedents' Estates and Fiduciary Relations) for wills and probate, and Title 14A V.S.A. (the Vermont Trust Code) for trusts.

This is the most common and most consequential estate planning mistake in Vermont. More than half of American adults lack wills, trusts, or any estate planning documents. When a Vermont resident dies without any plan, the state steps in and makes every decision through its intestate succession laws.

If you die without a valid will in Vermont, you are said to have died intestate. Under 14 V.S.A. § 301, any part of a decedent's estate not effectively disposed of by will passes by intestate succession to the decedent's heirs as set forth in §§ 301–338. The distribution follows legal relationships only, not emotional ones.

Vermont's intestacy law produces these results depending on your situation at death.

•      Married with no children: your spouse inherits everything. (14 V.S.A. § 311(1))

•      Married with children all from your current marriage: your spouse still inherits everything.

•      Married with children from a prior relationship: your spouse and those children split the estate 50/50. (14 V.S.A. § 311(2))

•      Single with children: the children inherit everything equally.

•      Single with no children: your parents inherit everything.

•      Domestic partner but unmarried: your partner inherits nothing, regardless of how long you were together or how much you intended to provide for them.

Vermont's intestacy law cannot name a guardian for your minor children, leave assets to a domestic partner, stepchild, or close friend, create a trust for a child with disabilities, express your charitable wishes, or specify your funeral preferences. Only a valid estate plan can do these things.

The Fix: Execute at minimum a will, durable power of attorney, and healthcare directive. For estates with real estate or other substantial assets, consider a revocable living trust. These documents should be prepared by a Vermont estate planning attorney and executed well before they are needed.

14 V.S.A. §§ 301–338

A handwritten note, an email, a voice memo, or a downloaded template that does not meet Vermont's execution requirements is not a valid will. Vermont courts have refused to probate documents that clearly expressed the decedent's wishes but failed the technical requirements of the statute.

Under 14 V.S.A. § 5, a valid Vermont will must be: in writing; signed by the testator or by someone else at the testator's direction and in their presence; and attested and subscribed by two or more credible witnesses in the presence of the testator and each other. Under 14 V.S.A. § 1, the testator must also be at least 18 years old and of sound mind at the time of execution.

Vermont does not recognize holographic wills, handwritten unwitnessed wills, unless executed in a jurisdiction that recognizes them and valid under that state's law. Vermont does not allow oral or electronic wills. A handwritten document expressing your wishes, no matter how clearly written, is not a valid Vermont will without two witnesses.

Additionally, under 14 V.S.A. § 319, if you marry after making a will and your new spouse is not provided for in that will, the surviving spouse retains the right to their statutory share regardless of the will's terms.

The Fix: Have your will drafted or reviewed by a licensed Vermont attorney, then sign it in the presence of two credible witnesses who also sign in your presence and in each other's presence. Do not rely on online templates that may not comply with Vermont's specific execution requirements.

14 V.S.A. §§ 1, 5, 112, 319

A will or trust created 15 years ago reflects who you were 15 years ago. Vermont law automatically addresses some life changes but not all of them, and the gaps can produce results the testator never intended.

Under 14 V.S.A. § 320, a final divorce or dissolution order nullifies a gift by will to a former spouse and any nomination of the former spouse as executor, trustee, guardian, or other fiduciary, unless the will specifically states otherwise. But Vermont law does not automatically change beneficiary designations on retirement accounts, life insurance policies, or trusts.

Life events requiring an immediate estate plan review include the following.

•      Marriage or civil union: your new spouse has statutory rights that may conflict with your existing will.

•      Divorce or separation: § 320 revokes testamentary gifts to an ex-spouse, but beneficiary designations are not automatically changed.

•      Birth or adoption of a child.

•      Death of a named beneficiary, executor, or trustee.

•      Significant change in assets such as purchasing or selling real estate or receiving an inheritance.

•      A beneficiary developing a disability that could disqualify them from Medicaid or SSI upon receiving a direct inheritance.

•      Relocating to or from Vermont.

The most dangerous gap: the automatic divorce revocation under § 320 applies only to the will, not to beneficiary designations on life insurance, IRAs, 401(k)s, or payable-on-death bank accounts. An ex-spouse who remains named as beneficiary on a life insurance policy will receive those proceeds regardless of what your will says.

The Fix: Review your entire estate plan, including will, trust, beneficiary designations, powers of attorney, and healthcare directives, after every major life event and at least every three to five years. Treat beneficiary designations as core estate planning documents, not administrative afterthoughts.

14 V.S.A. §§ 319, 320

Beneficiary designations on life insurance, IRAs, 401(k)s, 403(b)s, and payable-on-death bank accounts are among the most powerful documents in any estate plan and among the most neglected. These designations pass assets directly to named individuals at death, completely outside of probate and entirely independent of your will or trust.

A 20-year-old beneficiary designation on a $400,000 IRA will control, even if your will directs otherwise.

Common disasters caused by outdated or missing beneficiary designations include the following.

•      An ex-spouse receiving an entire life insurance payout because the divorce decree did not also change the policy designation.

•      A deceased beneficiary's share passing directly into the probate estate where it loses all tax-deferred treatment.

•      A person with special needs who receives a direct inheritance may be disqualified from Medicaid and SSI.

•      A minor child who receives a large sum directly requires the Probate Division to appoint a guardian of property under 14 V.S.A. Ch. 111, triggering exactly the court process you were trying to avoid.

The Fix: Inventory every account, insurance policy, and retirement plan you own. Verify both primary and contingent beneficiaries on each. Update them to align with your current wishes and your estate plan. If leaving assets to a minor or a person with disabilities, name a trust as beneficiary rather than the individual directly.

14 V.S.A. Ch. 111

This is the single most common trust mistake Vermont attorneys encounter. A couple spends hours with an attorney, pays to have a revocable living trust carefully drafted, signs it at the closing, and then never transfers a single asset into it. The trust sits in a drawer, an empty legal shell that does nothing.

Under 14A V.S.A. § 401, a trust is created by a transfer of property to another person as trustee, or by a self-declaration in which the owner of property declares themselves trustee. Without property being transferred into the trust, there is no funded trust, and therefore no probate avoidance, no incapacity protection, and no administration benefit whatsoever.

An unfunded revocable living trust does not avoid probate. If your home, bank accounts, and investment accounts remain titled in your individual name at death, those assets go through Vermont's full probate process, even with a signed trust sitting in your filing cabinet.

Funding a trust requires specific action for each asset class.

•      Real estate requires recording a deed conveying the property from you individually into the trust.

•      Bank accounts must be re-titled in the name of the trust or the trust designated as payable-on-death beneficiary.

•      Brokerage accounts must be transferred into the trust's name through your financial institution.

•      The trust should be named as the beneficiary of life insurance and, where appropriate, retirement accounts, though retirement account beneficiary designations require careful tax planning.

Under 14A V.S.A. § 1013, a trustee may provide a Certification of Trust to financial institutions and title companies, a summary document that proves the trust's existence and the trustee's authority without disclosing the full trust instrument, making the funding process far less burdensome than most people expect.

The Fix: Work with your attorney and financial advisor immediately after signing your trust to complete a funding checklist for every major asset class. Any real estate should have a deed prepared and recorded as part of the trust signing process, not as a later afterthought.

14A V.S.A. §§ 401, 1013

Most people think of estate planning as planning for death. But a complete Vermont estate plan also plans for incapacity, the period during which you are alive but unable to manage your own affairs. Without the right documents, your family faces a court-supervised guardianship process to accomplish even basic financial and healthcare decisions on your behalf.

Under 14 V.S.A. Ch. 127 (the Vermont Uniform Power of Attorney Act, effective July 1, 2023), a power of attorney is durable only if it contains language indicating it remains effective even if the principal becomes incapacitated. Certain powers require express authorization in the document, including creating or amending trusts under § 4031(1), making gifts under § 4031, and exercising authority over digital assets under Ch. 125. A general grant of authority does not automatically include these critical powers.

Without the word “durable,” a standard power of attorney terminates automatically upon the principal's incapacity, exactly when it is needed most. Without a valid durable power of attorney, your family must petition the Vermont Probate Division for a court-supervised guardianship, a public proceeding that can take months and cost thousands of dollars.

For healthcare decisions, Vermont law allows individuals to appoint a healthcare agent through an Advance Directive under 14 V.S.A. Ch. 121. Without it, healthcare providers may be forced to follow default rules that do not reflect your wishes.

The Fix: Every Vermont adult over 18 should have a Vermont Durable Power of Attorney under 14 V.S.A. Ch. 127 specifying their agent and the full scope of authority, and a Vermont Advance Directive naming a healthcare agent and expressing their healthcare and end-of-life wishes. Do not wait until a health crisis to execute these documents.

14 V.S.A. Ch. 111, Ch. 121, Ch. 127 (§§ 4001, 4031)

Vermont law protects surviving spouses from being disinherited. Many Vermonters, especially those in second marriages with children from prior relationships, create estate plans that attempt to leave everything to their children from a first marriage, not realizing that the surviving spouse has a statutory right to override the will and claim a guaranteed share of the estate.

Under 14 V.S.A. § 319, a surviving spouse may elect to waive the provisions of the decedent's will and instead take one-half of the balance of the probate estate, after payment of allowances, claims, and expenses. The election must be filed in writing within four months of the later of service of the notice of the surviving spouse's rights, or appointment of the personal representative.

Vermont also prohibits deathbed transfers designed to defeat the elective share. Under 14 V.S.A. § 321, a voluntary transfer of property during marriage without adequate consideration and for the primary purpose of defeating the surviving spouse's elective or intestate share is void, unless the spouse previously waived their rights under § 323.

This means that transferring assets to an irrevocable trust or to children shortly before death in order to cut out a surviving spouse may be undone by the court. A prenuptial or postnuptial agreement waiving the elective share is valid only if executed with proper formalities and consideration under § 323.

The Fix: If you are in a second marriage with children from a prior relationship, your estate plan must carefully balance the interests of your surviving spouse against those of your children. This planning challenge often requires a QTIP trust or another structured arrangement. This is not a plan to attempt without an experienced Vermont estate planning attorney.

14 V.S.A. §§ 319, 321, 323

The executor, called the personal representative in Vermont, and the trustee are the people who actually carry out your estate plan. Choosing the wrong person out of family loyalty, obligation, or inertia is one of the most common and most damaging estate planning mistakes Vermont attorneys see. A bad choice can result in mismanagement of assets, family litigation, and court proceedings that consume the estate.

Under 14A V.S.A. § 706, the Probate Division of the Superior Court may remove a trustee for serious breach of trust, lack of cooperation among co-trustees that substantially impairs administration, unfitness or persistent failure to administer effectively, or where removal best serves the interests of the beneficiaries.

Warning signs that you have chosen the wrong person include the following.

•      Living far from Vermont and being unable to travel to handle practical matters.

•      A history of financial difficulty, addiction, or conflict with other beneficiaries.

•      Being the same age as you, creating risk of simultaneous incapacity.

•      Having never formally agreed to serve, or having been named decades ago without re-confirmation.

•      Having a contentious relationship with the beneficiaries.

•      Lacking any financial, legal, or administrative background for a complex estate.

The Fix: Choose your executor and trustee based on competence, character, and availability, not family hierarchy or obligation. Always name at least one alternate. For complex estates or situations involving family conflict, consider naming a professional fiduciary as sole trustee or co-trustee. Discuss the role explicitly with your chosen person before naming them.

14 V.S.A. § 903; 14A V.S.A. § 706

Estate planning is not just about what happens after you die. It is also about what happens if you become unable to manage your own affairs while still alive. Illness, accident, or cognitive decline can strike at any age. Without incapacity planning documents in place, your family faces a lengthy, expensive, and very public court process.

Vermont's guardianship process under 14 V.S.A. Ch. 111 requires a formal court petition, medical evidence of incapacity, appointment of a guardian, and ongoing court supervision. The appointed guardian must file annual reports with the Probate Division and obtain court approval for significant financial decisions.

A revocable living trust provides seamless incapacity protection: your successor trustee can step in immediately, without any court involvement, to manage trust assets. But the trust must be funded. An unfunded trust offers no incapacity protection whatsoever.

Every Vermont adult needs three documents for complete incapacity protection.

•      Durable Power of Attorney (14 V.S.A. Ch. 127): Authorizes an agent to manage financial and legal matters if you cannot.

•      Vermont Advance Directive (14 V.S.A. Ch. 121): Names a healthcare agent and expresses your healthcare wishes, including end-of-life decisions.

•      Funded Revocable Living Trust (14A V.S.A. § 602): Allows your successor trustee to manage trust assets immediately upon your incapacity, without any court involvement.

The Fix: Do not wait until you are sick or facing a health crisis to execute incapacity documents. Vermont law requires legal capacity at the time of signing. If you wait too long, only a guardianship petition can give another person legal authority to act for you.

14 V.S.A. Ch. 111, Ch. 121, Ch. 127; 14A V.S.A. § 602

Modern estate planning must account for digital assets, including email accounts, social media profiles, online financial accounts, cryptocurrency holdings, digital photographs, and subscription services. Without explicit planning, your executor and trustee may be legally unable to access these accounts even with a perfectly drafted will.

Vermont enacted the Revised Uniform Fiduciary Access to Digital Assets Act at 14 V.S.A. Ch. 125 to give fiduciaries access to a decedent's or incapacitated person's digital assets. However, access is not automatic. Under 14 V.S.A. § 3554, a user must have expressly authorized disclosure during their lifetime, either through an online tool provided by the custodian or through a will, trust, or power of attorney.

A direction using an online tool overrides a contrary direction in a will or trust, meaning your platform settings take legal precedence over your estate planning documents. Without explicit authorization, your executor may be legally prohibited from accessing your email or liquidating cryptocurrency, even with a fully funded trust and a detailed will.

Federal privacy laws, including the Electronic Communications Privacy Act at 18 U.S.C. § 2701, restrict access regardless of what your will says, unless you authorized disclosure while you were alive.

The Fix: Create a digital asset inventory listing all online accounts and instructions for where your passwords are securely stored. Expressly authorize your executor, trustee, and power of attorney agent to access digital assets by citing 14 V.S.A. Ch. 125 in each document. Set up legacy contact or inactive account settings on major platforms. For cryptocurrency holdings, document wallet addresses and private key access procedures.

14 V.S.A. Ch. 125 (§ 3554); 18 U.S.C. § 2701

Vermont's Medicaid program will pay for nursing home care only after you have spent down most of your assets to very low qualifying levels. Without proactive planning, a couple's life savings accumulated over decades can be consumed by nursing home costs before Medicaid coverage begins. The time to plan for long-term care is years before you need it, not the week of admission.

The core challenge is Medicaid's 60-month, or five-year, look-back period for institutional nursing home care. Any assets transferred for less than fair market value within the five years before a Medicaid application trigger a penalty period during which Medicaid will not pay for care.

One of the most widely misunderstood facts about Medicaid planning: a revocable living trust provides zero Medicaid protection. Because you retain the right to revoke the trust, all trust assets are counted as available resources for Medicaid eligibility purposes. Only a properly structured irrevocable trust created more than five years before applying for Medicaid can provide meaningful asset protection from nursing home costs.

Vermont Medicaid planning tools that may provide protection include the following.

•      Irrevocable trusts funded more than five years before applying for benefits.

•      The Vermont Enhanced Life Estate Deed authorized under 27 V.S.A. Ch. 6, which allows real property to pass at death without triggering the look-back period in most cases.

•      The Vermont community spouse resource allowance and minimum monthly maintenance needs allowance, which allow a community spouse to retain certain assets and income.

•      The federal caregiver child exception that allows a transfer of the home to an adult child who lived there and provided care for at least two years.

The Fix: If you or a loved one is in their 60s or has a family history of cognitive decline or chronic illness, begin Medicaid planning now, not when nursing home placement is imminent. A five-year head start can protect the majority of your assets. Work with an elder law attorney who specializes in Vermont Medicaid planning and coordinates with your overall estate plan.

42 U.S.C. § 1396p; 27 V.S.A. Ch. 6

Even a perfectly drafted estate plan becomes outdated. Laws change, relationships change, assets change, and tax thresholds change. A will drafted in 2010 reflects the law, your assets, and your family as they were in 2010, not as they are in 2026.

Vermont estate planning law has changed significantly in recent years.

•      The Vermont Trust Code at 14A V.S.A. was enacted in 2009.

•      The Vermont Uniform Power of Attorney Act at 14 V.S.A. Ch. 127 became effective July 1, 2023, replacing the prior statute entirely.

•      The Uniform Directed Trust Act at 14A V.S.A. Ch. 13 became effective May 13, 2024.

•      The Vermont Revised Uniform Fiduciary Access to Digital Assets Act at 14 V.S.A. Ch. 125 was enacted in 2017.

Plans predating these laws may be missing important protections and opportunities now available under Vermont law.

Events requiring an immediate estate plan update include the following.

•      Marriage, divorce, or a new civil union.

•      The birth or adoption of a child or grandchild.

•      The death of a named executor, trustee, or beneficiary.

•      A major change in assets such as real estate or retirement accounts.

•      A beneficiary developing a serious disability that may require a special needs trust.

•      Moving to or from Vermont, since state laws vary significantly.

Routine reviews with no specific triggering event should occur at least every three to five years. Any major change in federal or Vermont estate tax law warrants an immediate consultation with your attorney.

The Fix: Set a recurring calendar reminder every three years to schedule an estate plan review with your attorney. Treat your estate plan like a tax return, something that must be actively maintained, not just signed once and forgotten. The cost of a periodic review is a fraction of the cost of fixing a problem after death, when it is too late to make any corrections.

14A V.S.A. (Vermont Trust Code, enacted 2009); 14 V.S.A. Ch. 127 (effective July 1, 2023); 14A V.S.A. Ch. 13 (effective May 13, 2024); 14 V.S.A. Ch. 125 (enacted 2017)

Every mistake described in this guide is preventable. The right estate planning attorney will identify your specific exposure, ensure your documents meet Vermont's technical requirements, coordinate your will, trust, and beneficiary designations, and build a review schedule that keeps your plan current as your life evolves. At Will and Trust Planning, we begin every engagement with a Peace of Mind Planning Session, a working conversation built around your real situation, not a generic checklist.

Contact Will and Trust Planning Today

For personalized advice on estate planning, including strategies to minimize or avoid probate, contact Will and Trust Planning today. Our experienced estate planning attorneys can help you understand your options, draft essential documents, and create a plan that protects your assets and achieves your goals.