Although the principle of the trust can revoke this instrument at any time during their life, things become much more complicated if such a revocation does not occur. In these circumstances, a trustee and executor of an estate are faced with the difficult task of reconciling what holds precedent, the will, trust or a combination of both.

14A VSA § 604-Contesting validity of trust after death.

After the death of the settlor, a party can contest the validity of the trust within 3 years after death. Evidence can be presented to the Probate Court as to why a trust should be considered. Such evidence could include but is not limited to:

1. A divorce order that proceeded the date of the trust: This is especially relevant in cases where the primary beneficiary is the former spouse;
2. A subsequent estate planning document such as a will that aims to convey similar property that is set forth in the terms of the trust.
3. Written intent by the donor as to their intent to change the terms of the trust or their intent to outright revoke all terms.

Vermont estate planning should always be considered an open door while an individual is alive and their personal and professional circumstances remain fluid. Ensuring that estate documents are regularly updated is a good way to avoid potential pitfalls such as they forgotten trust. Although some time and expense may need to be regularly incurred, it beats the alternative of leaving your loved ones with a tangled web of estate documents that may hold little relevance to the present, but who could still hold legal precedent in the eyes of the law.

Intestate Estate

Dying intestate simply means death without a will. In these cases, the distribution of assets can be as complicated as your family dynamics.

14 V.S.A. § 311 provides that should a decedent pass without a will, the entire estate shall pass to the surviving spouse if: (1) there are no descendants (children) of the decedent or (2) all descendants are also descendants of the surviving spouse. In this scenario, all assets, including real estate, investment accounts and personal property will, after a judge’s decree, pass to the spouse.

What if I Have Children From a Prior Relationship?

The complications of an intestate estate begin to magnify when the decedent has children that are not the children of the surviving spouse. Subsection (2) of 14 V.S.A. § 311, provides that should this scenario occur, the surviving spouse will receive 50 percent of the decedent’s estate, while the surviving child or children will split the other 50 percent.

What if I Have No Children and No Surviving Spouse at Time of My Death?

Here is where things get real complicated. If you pass without any children or spouse that survive you 14 V.S.A. § 314 kicks in, which provides the following distribution priority:

(1) to the decedent’s parents equally if both survive or to the surviving parent;

(2) to the decedent’s siblings and the descendants of any deceased siblings by right of representation;

(3) one-half of the intestate estate to the decedent’s paternal grandparents equally if they both survive or to the surviving paternal grandparent and one-half 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;

(4) in equal shares to the next of kin in equal degree.

How Long Can It Take to Probate an Intestate Estate?

Depending on the complexity of the estate, probating an estate can take several months to several years. The length of this process will be dependent on many factors, including the complexity of the family tree and whether there are any disputes as to distributions. It is not uncommon for relatives of an intestate estate to make claims for certain assets that require a judge to weigh in on the validity of that claim. Meanwhile, the estate remains dormant, and the assets frozen (with the exception of paying estate expenses).

Just Do it

This post only touches on the many complexities of an intestate estate. The simple math of this analysis is this; regardless of your asset picture, drawing up a will can avoid much of the heartache, stress and expense that your family will endure if you elect not to. A Vermont will is not as scary as it sounds and can be simple and straight forward, the only thing more simple then that, is the potential landmines that you will leave your loved ones if you don’t.

The content here should not be construed as legal advice. Any specific legal questions should be directed to an attorney licensed to practice in Vermont.

Do you need a trust to protect your assets from probate and taxes? You may be surprised to hear that the answer is probably not. Unless you have an expensive portfolio of funds that you wish to control during your lifetime, you probably do not need to undergo the expense of creating a trust. Trusts can result in a hefty set of legal fees and a confusing journey for you or your Trustee. 

BENEFITS OF A TRUST: 

1. To Avoid Probate and Taxes.

If you are trying to keep your funds from being taxed upon your death, and hoping to prevent them from being probated through Court, you may then want to create a trust. However, there are multiple alternatives such an Enhanced Life Estate Deed, which allows for you to control the property during your lifetime, and directs that property transfers to your Grantee of choice automatically upon your death (more on that below).

2. To Control Disbursement of Assets Over Time.

Another reason to create a trust is to control the disbursement of funds over time (either before, or after, your death).  This is particularly beneficial for those creating the trust (called “Settlors”) to be able to control whether their beneficiary can access (and therefore) spend their entire disbursement all at once. 

3. To Protect Assets Intended for Beneficiaries From Creditors During the Trust Lifetime. 

If a beneficiary is expecting assets from a trust, creditors cannot touch the money until it is in their hands. However, child support is one exception to this. Child support that is due can attach to potential disbursements of trust monies. 

REASONS YOU MAY NOT NEED A TRUST:

“Transfer upon death” designation for beneficiaries:

Any stock portfolio or retirement fund is likely to have the option to create a “transfer upon death” beneficiary, which would allow the funds to transfer automatically upon death, thus avoiding the probate process entirely.

Enhanced Life Estate Deed

An Enhanced Life Estate Deed allows you to release ownership (or “quitclaim”) of any of your real estate property to specific person(s) of your choosing (“grantee”), with the intent that the property ownership transfers fully and immediately upon your death. A benefit of this type deed is that, during your lifetime, you still retain complete control to mortgage or sell the property. Still alive but now you decide you want to sell the family home you quitclaimed to your children through an Enhanced Life Estate Deed? You still has sole discretion to do that.

Last Will and Testament

Although the Last Will and Testament does not avoid probate entirely, it does make the probate process much easier for your family. You have the opportunity to spell out every last detail of your wishes and, if necessary, can create a “Testamentary Trust” within the document which is a simple way to create a trust for your needs without spending too much extra money and without adding additional confusion for your loved ones. A will can be as simple, or as complex, as you like and even leave generic assets such as all real property “either owned now or after acquired” so whatever you might buy after you make the will would be covered. 

Trusts can be a very complex (and even hundreds of pages long) and confusing thing for family members to navigate after your death. It is helpful to reach out to your attorney to discuss whether you need one or not. However, be sure you are not enticed by the complexity of a process if it can be executed through a much simpler, cheaper, route that is more manageable for your executors.