Nov 2017 AFR: 2.4%
Gift Annuity State Regulations

Vermont


Intestacy


General Definition

Any part of a decedent's estate not effectively disposed of by will passes by intestate succession to the decedent's heirs. Title 14 Sec. 301.

Order of Distribution

After payment of the debts, funeral charges and expenses of administration, the intestate share of the decedent's surviving spouse is distributed as follows:

  1. The surviving spouse will receive the entire intestate estate if no descendant of the decedent survives the decedent or if all of the decedent's surviving descendants are also descendants of the surviving spouse.
  2. If the decedent left descendants who are not descendants of the surviving spouse and are not excluded by the decedent's will from inheriting, the surviving spouse will receive 1/2 of the intestate estate. Title 14 Sec. 311.

Whenever the estate of a decedent who dies intestate consists principally of a vessel, snowmobile, or all-terrain vehicle, the surviving spouse shall be deemed to be the owner of the vessel, snowmobile, or all-terrain vehicle, and title to the vessel, snowmobile, or all-terrain vehicle shall automatically pass to the surviving spouse. Title 14, Sec. 313.

The balance of the intestate estate not passing to the surviving spouse passes to:
  1. The decedent's descendants by right of representation;
  2. If the decedent is not survived by a spouse or descendants, decedent's property passes to the decedent's parents equally if both survive or to the surviving parent;
  3. Then to the decedent's siblings and the descendants of any deceased siblings by right of representation;
  4. Then 1/2 of the intestate estate to the decedent's paternal grandparents equally if they both survive or to the surviving paternal grandparent and 1/2 of the intestate estate to the decedent's maternal grandparents equally if they both survive or to the surviving maternal grandparent and if decedent is survived by a grandparent, or grandparents on only one side, to that grandparent or those grandparents;
  5. Then in equal shares to the next of kin in equal degree.
  6. Then to the state. Title 14 Sec. 314.

If property passes by right of representation, the property will be divided into as many equal shares as there are children or siblings of the decedent, as the case may be, who either survive the decedent or who predecease the decedent leaving surviving descendants. Title 14 Sec. 314.

Will Qualifications


Common Law or Community Property

Vermont is a common law property state.

Capacity

A person of age and sound mind may devise, bequeath and dispose of his estate, real and personal, and of any right or interest which he has in any real or personal estate, by a last will and testament. Title 14 Sec. 1.

Drafting

A will must be in writing signed by the testator, or by the testator's name written by some other person in the testator's presence and by the testator's express direction and attested and subscribed by two or more credible witnesses in the presence of the testator and of each other. Title 14 Sec. 5.

Beneficiaries

A beneficiary is any person who has any present and/or future interest, vested or contingent.

Except as provided for in the decedent's will, an individual who fails to survive the decedent by 120 hours is deemed to have predeceased the decedent for purposes of the homestead allowance, exempt property, intestate succession, and taking under decedent's will. Title 14 Sec. 337.

If it is not established by clear and convincing evidence that an individual who would otherwise be an heir or beneficiary survived the decedent by 120 hours, it is deemed that the individual failed to survive for the required period. This does not apply if it would result in the state receiving decedent's property. Title 14 Sec. 337.

Modifications

A will is revoked by implication of law, execution of another will, codicil or other writing, or by burning, tearing, canceling or obliterating the writing, with the intention of revoking the will, by the testator himself, or by some person in his presence and by his express direction. Title 14 Sec. 11.

A final divorce order from any state nullifies a gift by will or inheritance by operation of law to an individual who was the decedent's spouse at the time the will was executed if the decedent was no longer married to or in a civil union with that individual at the time of death, unless the will specifically states to the contrary. Title 14 Sec. 320.

Probate Process


Naming of Executor

The decedent has the right to name the executor of his or her estate through a validly constructed will.

Submission of Will

A person named executor in a will and who has knowledge of the will must file a petition to open the decedent's estate in the probate court where the venue lies. If the person named learns of the nomination prior to the testator's death, the petition must be filed within 30 days of learning of the death. If the person learns that they are named executor of the estate after the testator passes away, the petition must be filed within 30 days of learning of being named executor. Title 14 Sec. 104.

When a will has been allowed, the probate court will issue letters testamentary to the person named as executor if the person accepts the trust and gives a bond as required by law. Title 14 Sec. 902.

If an executor is not named in the will, or if a person dies intestate, administration will be granted to the surviving husband or wife, as the case may be, or next of kin or both, or to a person the surviving husband or wife or next of kin requests to have appointed. If this person is incompetent or parties neglect to apply within the requisite time, the position may be granted to one or more of the principal creditors, if competent and willing to serve or another suitable person appointed by the court. Title 14 Sec. 903.

Notifications

Within thirty days after the allowance of a will containing a devise or a bequest the court will mail, postage paid, a written notice thereof to each beneficiary, devisee, or legatee named in the will. Title 14 Sec. 111.

Inventory

Within 30 days after appointment, the executor or administrator must prepare an inventory of property owned by the decedent at the time of death, listing all items and their fair market value as of the date of the decedent's death. The inventory must also include the amount of any lien or encumbrance that may exist with reference to any item. The executor or administrator must file the original of the inventory with the probate court, and serve copies as provided by the rules of probate procedure. The time for filing the inventory may be extended by the court for a period not to exceed a total of 90 days. Title 14 Sec. 1051.

Elective Share, Exempt Property and the Family Allowance.

A surviving spouse may waive the provisions of the decedent's will and elect to take one-half of the balance of the estate, after the payment of claims and expenses. Title 14, Sec. 319.

The surviving spouse must be living at the time this election is made. If the surviving spouse is mentally disabled and cannot make the election personally, a guardian or attorney acting under a valid durable power of attorney may do so. Title 14, Sec. 319.

Upon motion, the surviving spouse of a decedent may receive out of the decedent's estate all furnishings and furniture in the decedent's household when the decedent leaves no descendants who object. If any objection is made by any of the descendants, the probate division of the superior court shall decide what, if any, of such personalty shall pass. Title 14, Sec. 312.

The probate division of the superior court may make reasonable allowance for the expenses of maintenance of the surviving spouse and minor children or either, constituting the family of a decedent, out of the personal estate or the income of real or personal estate from date of death until settlement of the estate, but for no longer a period than until their shares in the estate are assigned to them or, in case of an insolvent estate, for not more than eight months after administration is granted. Title 14, Sec. 316.

Debts and Distributions

If the assets of the estate are insufficient to pay all claims in full, the executor or administrator must make payment in the following order:

  1. Costs and expenses of administration;
  2. Reasonable funeral, burial, and headstone expenses, and perpetual care, not to exceed $3,800.00 exclusive of governmental payments, and reasonable and necessary medical and hospital expenses of the last illness of the decedent, including compensation of persons attending him or her;
  3. Wages due employees which have been earned within three months prior to the death of the decedent, not to exceed $300.00 to each claimant;
  4. All other claims; including the balance of wages due but unpaid. Title 14 Sec. 1205.

Shares of the distributees granted under a will abate in the following order:

  1. Property not disposed of by the will;
  2. Residuary devises and bequests;
  3. General devises and bequests;
  4. Specific devises and bequests.

For purpose of abatement, a general devise or bequest charged on any specific property or fund is a specific devise or bequest to the extent of the value of the property on which it is charged, and upon the failure or insufficiency of the property on which it is charged, a general devise or bequest to the extent of the failure or insufficiency. Abatement within each classification is in proportion to the amounts of property each of the beneficiaries would have received if full distribution of the property had been made in accordance with the terms of the will. Title 14 Sec. 338.

Estate/Inheritance Tax


Tax Rate

Estates less than $2.75 million will pay no estate tax. Above that amount, the estate tax equal to 16% of the excess over $2.75 million. Title 32 Sec. 7442a.

Property Inclusion

The "Vermont estate" is not defined by statute.

Filing and Payment

The estate tax is due within nine months of the death of the decedent. Title 32 Sec. 7447.

Income Tax Charitable Deductions and/or Credits


Vermont allows a taxpaying resident to deduct itemized charitable gifts in the same manner as the IRS. Title 32 §5824.

Vermont also allows a taxpayer to claim a credit for charitable investments in housing. The credit is available to individuals, businesses, insurance companies, banks and other financial institutions. The amount of the credit is equal to the amount of the difference between the net income that would have been received by the taxpayer at the charitable threshold rate during the taxable year and the actual income received by, or credited to, the taxpayer. The credit shall not exceed 3% of the average outstanding principal in the investment but may be taken until the entire principal is retuned, transferred or the charity ceases to be eligible. Title 32 §5830c.

Gift Annuity Requirements


Vermont, a "conditional exemption" state, governs the issuance of charitable gift annuities under Title 9, Secs. 2517 and 2518.

Exemption Qualifications

Charities issuing gift annuities must be described in Sec. 501(c)(3) or Sec. 170(c)(3), have been in continuous operation for at least three years (or is a successor/affiliate of an organization that has) and have at least $300,000 in unrestricted assets (cash, cash equivalents, or publicly-traded securities exclusive of the assets funding the gift annuity) plus assets necessary to fund the outstanding annuity obligations. The gift annuity agreement must comply with Sec. 501(m)(5) and Sec. 514(c)(5), provide the annuity amount, payment frequency, and the date the payments are scheduled to begin.

Vermont has a significant enforcement and remedies provision. Failure to comply with state law may result in a court action by the attorney general against the charity to temporarily or permanently restrain the activity, to revoke the authority of the charity or, if the organization is a Vermont charity, dissolve the corporation entirely. In addition, the state may seek to impose a civil penalty of up to $1,000 per agreement with a $10,000 maximum total for failure to make required disclosures and $10,000 for non-qualifying charitable organizations issuing gift annuities.

Disclosure Language

Gift annuity agreements must include the following state-specific language (in print no smaller than that used in the agreement generally):

"A charitable gift annuity is not insurance under the laws of this state, and is not subject to regulation as insurance by the department of banking, insurance, securities, and health care administration, or protected by an insurance guaranty association."

Reserve Requirements

Vermont does not require an issuing charity to hold any amount in reserve.

Annual Filing Requirements

No annual reporting or notification is required.

State Contact Information

Vermont Insurance Division
Department of Banking, Insurance, Securities & Health Care Administration
89 Main Street, Drawer 20
Montpelier, VT 05620-3101
(802) 828-4847
Sandra Fraser (Licensing Supervisor)
sfraser@bishca.state.vt.us

State Forms

None
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