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Probate and Estate Administration is the process of wrapping up a deceased person's affairs. Depending on the type of estate planning the person had the course of action can take different forms.
If the deceased had no estate planning documents, a petition will need to be filed with the Vermont probate court in the county where the decedent lived. The Vermont probate court will name an administrator to manage the decedent's property and oversee the probate process. When a person dies without a will in Vermont, the state's new intestacy laws come into effect, meaning that Vermont has a plan for how a decedent's property will be distributed when the decedent did not state who should receive what.
If the deceased had a valid will for an estate plan, the will must be submitted to the Vermont probate court in the county where the decedent lived. Usually, a will names an executor who, with the probate court's approval, manages the decedent's property and oversees the probate process. Because a will includes the decedent's wishes for how their property should be distributed, Vermont's intestacy laws do not apply (unless the will does not account for some of the decedent's property, in which case the intestacy laws apply).
The probate process can be straightforward or contentious and complicated, depending principally on two factors: how large the estate is and the types of assets included, and whether anyone contests the will. Small and uncomplicated estates usually take 3 – 9 months in Vermont, while complicated estates can take years. The major steps involved in the probate process include proving the validity of a will, creating an inventory of the estate assets with appraisals as needed, payment of debts to creditors, sale of estate assets as appropriate, payment of estate taxes and final distribution to heirs or beneficiaries. Throughout the probate process, heirs, beneficiaries and other interested persons must be notified of certain court filings, such as the estate inventory.
Some assets do not need to go through probate even where a will exists, or where the decedent died intestate, i.e. without a will. Examples include property owned as a joint tenant, retirement accounts and life insurance policies that include a beneficiary designation, bank accounts that have a "pay on death" designation, and property funded into a trust.
If the decedent had a revocable living trust, usually there is no need for probate in Vermont because the decedent's property passes according to the terms of the trust, provided the property was funded into the trust prior to the decedent's death. Property left outside the trust would normally pass through probate then be placed in the trust.
Administration of a trust involves creating an inventory of what assets are in the trust, what assets, if any, the decedent owned outside of the trust, and allocation of trust assets to subtrusts, among other matters. If assets exist outside the trust, a probate petition would be filed for those assets.
FAQs – Wills and Probate
What is a will?
A will is a written document (or sometimes an oral declaration) providing instructions for who should receive your property after you die. A will usually names an executor to manage the Vermont probate process and a guardian to raise your minor children. In Vermont probate courts, wills must be signed and properly witnessed by two individuals to be valid. A will has no effect until the drafter's death, at which time the will must be submitted to the Vermont probate court and the probate process begun.
What is Abatement?
Abatement occurs when there are insufficient assets in the deceased person's estate to cover debts and obligations in the will and thus certain obligations must be reduced or eliminated. In Vermont, absent an abatement clause in the will, abatement applies first to property not disposed of by the will, then residuary devises and bequests, then general devises and bequests, then specific devices and bequests.
What is ancillary administration?
Ancillary administration refers to the administration of a decedent's estate in a state that is not the decedent's domiciliary state. For example, if a Vermont resident owns real property in New York, there may be a need for an ancillary administration (probate process) in New York upon the death of the property owner.
What is a Bequest?
A bequest is a gift of personal property in a will. See also Device and Legacy.
What is a Codicil?
A codicil is an amendment to a will.
What is a Devise?
A devise is a gift of real property in a will. See also Bequest and Legacy.
What is an Executor?
An executor is a person named in a will, or appointed by the court, that is in charge of administering the deceased person's estate during the probate process.
Does an Executor get paid?
Executors are usually reimbursed for expenses related to the position, including hiring an attorney to assist with the probate process. The will may also allow the executor to be paid compensation for duties performed.
What is an Heir?
An heir is someone who receives property under a state's intestacy laws.
What is Insolvency?
Insolvency refers to a situation where a person's total assets are insufficient to pay off the person's debts.
What is Intestate?
A person who dies without a valid will is said to have died intestate.
What is an Inventory?
An inventory is an itemized list of assets owned by the decedent at the time of death.
What is a Legacy?
A legacy is a gift of money in a will. See also Bequest and Devise.
What are Letters of Administration?
Letters of Administration is a document issued by the probate court appointing the administrator of an estate where the decedent died without leaving a will.
What are Letters Testamentary?
Letters Testamentary is a document issued by the probate court appointing the executor of an estate where the decedent died leaving a will.
What is Probate?
Probate has come to mean the process of proving the validity of a will, and administering the related assets in conjunction with the court's oversight until final distribution to beneficiaries or heirs.
What is Testamentary Capacity?
Testamentary capacity is the minimum level of mental competence a will maker must possess when writing a will. Generally, a will maker must be able to: (1) understand the nature and extent of their assets; (2) identify the natural objects (usually children) of his or her bounty; and (3) understand the nature of a will and express the intention to provide for the disposition of his or her assets.
What are a Testator and Testatrix?
A person who dies with a valid will. A testator is male; a testatrix is female. Over time, testator has come to be used for both males and females who die with a valid will.
What is Undue Influence?
Undue influence refers to someone exerting pressure on a will maker to write their will a certain way, usually to the benefit of the person exerting the undue influence.
What is a will contest?
A will contest occurs when someone objects to the validity of a will or a will's dispositions. Will contests tend to slow down the probate process considerably and make the process far more expensive, because attorneys are usually hired to defend or attack the will, which often focuses on the competency of the will maker at the time the will was drafted.
FAQs – Trust Administration
What is a trust?
A trust is a fiduciary relationship established between the trustee and the beneficiary where the trustee is the holder of legal title to property that is being held for the benefit of the beneficiary. Trusts come in many forms, but the majority of trusts used in estate planning are knows as revocable living trusts, or inter vivos trusts. Revocable living trusts may be amended or revoked by the trust maker, known as the grantor. Advanced estate planning often incorporates irrevocable trusts, which may not be amended after going into effect.
What is a Credit Shelter Trust?
A credit shelter trust is a trust that preserves a decedent's unified credit for estate and gift tax purposes. The trust "shelters" the decedent's estate tax exclusion so that married couples retain two estate tax exemptions rather than just one.
What is a Grantor Trust?
A grantor trust is a type of trust whereby the person who created the trust is treated by the Internal Revenue Service as the owner of the assets in the trust for tax purposes. Most revocable living trusts are grantor trusts.
What is a Marital Deduction Trust?
A marital deduction trust is often included in a living trust to hold assets exceeding the decedent's estate tax exclusion amount. By holding the excess assets in a trust that qualifies for the unlimited marital deduction, taxes are delayed until the death of the second spouse.
What is a Revocable Living Trust?
A revocable living trust is created by the settlor while the settlor is alive to achieve various estate planning goals, including reducing or eliminating federal and state estate taxes, avoiding probate, providing for stability in the event the settlor becomes incapacitated, and creating a smooth transition and transfer of assets to the beneficiaries after the settlor dies.
What is a Settlor?
A settler is the person who creates a trust and transfers property to the trust.
What is a Trustee?
A trustee is a person who has legal title to property, but holds it in trust for the benefit of another (beneficiary) and owes the beneficiary fiduciary obligations.
FAQs – General Estate Administration
What is Administration?
Administration is the process of collecting and managing a decedent's property, paying taxes and creditors and distributing the remaining property to beneficiaries or heirs.
What is the Alternate Valuation Date?
The alternate valuation date is a date six months after the decedent died at which time the decedent's estate may be valued. If the alternate valuation date would save taxes versus a valuation based on the decedent's date of death, the alternate valuation date may be used for estate tax filings.
What is a Beneficiary?
A beneficiary is someone who receives property according to the terms of a will or receives equitable title to property in trust according to the terms of a trust.
What is a Devise?
A devise is a gift of real property (real estate) in a will.
What is a Disclaimer?
A disclaimer is a person's refusal to accept rights or interest in specific property offered to the person. A successful disclaimer must be done within nine months, and must follow specific requirements, so it is important to discuss with a CPA or attorney when contemplating a disclaimer. When property is disclaimed, it passes as if the disclaimant were not alive at the time.
What is Domicile?
Domicile is one's permanent state of residence.
What is a Donor?
A donor is someone who makes a gift.
What is an Estate?
One's estate is the total of your assets, debts and other obligations. Estate can be used in different contexts, for instance probate estate (all assets passing through probate) and estate tax estate (all assets subject to federal or state estate tax).
What is a Fiduciary?
A fiduciary has a legal duty to act in the best interest of another, for example a trustee has fiduciary obligations to the beneficiaries. Fiduciaries generally have a duty of loyalty, a duty of care and a duty to account.
What is the Gift Tax?
A tax imposed on transfers of money or property during the giver's lifetime.
What is a Guardian?
A guardian is legally responsible for the care and well being of another person, usually a minor. Guardians are appointed by the court, but the courts will usually honor a parents selection of a guardian in the parent's will, provided there are no compelling reasons not to appoint that person.
What is a Guardianship?
A guardianship is the court-managed process for overseeing the affairs of a minor child or incompetent person.
What is Joint Tenancy?
Joint tenancy is a form of ownership where two or more people own property together, and if one of the joint owners dies, their share passes to the remaining joint owners. A form of joint tenancy for married couples is known as tenancy-by-the-entirety.
What is the Marital Deduction?
The marital deduction is the amount that one spouse can pass to the other free of state or federal taxes. Currently, the marital deduction is unlimited, meaning that a spouse can pass an unlimited amount of money or assets to their surviving spouse tax free.
What is Personal Property?
Personal property is anything that is movable, such as the contents of a home, automobiles, equipment and cash.
What is a Power of Appointment?
A power conferred by a donor to a person by language in a deed, will or trust allowing the person to select one or more recipients of the donor's estate or income.
What is Real Property?
Real property is land, also known as real estate, and anything that is permanently attached to the land, such as a home, office building or farm barn.
What is Tenancy-by-the-Entirety?
Tenancy-by-the-entirety is a form of joint tenancy for married couples.
What is Tenancy-in-Common?
Tenancy-in-common is a form of ownership where two or more people own property together, but if one joint owner dies, the property passes to decedent's beneficiaries or heirs, and not the other joint owners.
What is a Testamentary Trust?
A testamentary trust is included in a will and comes into being only after the will maker dies and the assets pass through probate first. |