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. These errors range 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.

The 12 Mistakes at a Glance •       #1  Having no estate plan at all •       #2  A will that does not meet Vermont's formal requirements •       #3  Failing to update your plan after major life changes •       #4  Outdated or missing beneficiary designations •       #5  Creating a trust but never funding it •       #6  No durable power of attorney or healthcare directive •       #7  Ignoring the surviving spouse's elective share •       #8  Choosing the wrong executor or trustee •       #9  Failing to plan for incapacity •       #10  Failing to plan for digital assets •       #11  Waiting too long for Medicaid and long-term care planning •       #12  Not reviewing your estate plan regularly

Mistake #1: Having No Estate Plan at All

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 a plan, the state steps in and makes all decisions under its intestate succession laws.

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.

What Vermont's Intestacy Law Produces — And Cannot Do •       Married, no children: Spouse inherits everything (14 V.S.A. § 311(1)) •       Married, children from current marriage only: Spouse still inherits everything •       Married, children from a prior relationship: Spouse and those children split the estate 50/50 (§ 311(2)) •       Single with children: Children inherit everything equally •       Single, no children: Parents inherit everything •       Domestic partner, unmarried: Your partner inherits NOTHING — regardless of how long you were together 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 ✦     Specify your funeral preferences

✦  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.

Mistake #2: A Will That Does Not Meet Vermont's Formal Requirements

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 to meet the statute's technical requirements.

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. The testator must also be at least 18 years old and of sound mind (14 V.S.A. § 1).

Vermont does not recognize holographic wills — handwritten, unwitnessed wills — unless executed in a jurisdiction that recognizes them (14 V.S.A. § 112). 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, your surviving spouse retains the right to their statutory share regardless.

✦  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.

Mistake #3: Failing to Update Your Estate Plan After Major Life Changes

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 — 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. Critically, § 320 does NOT automatically change beneficiary designations on retirement accounts, life insurance policies, or trusts.

Life Events That Require an Immediate Estate Plan Review ✦     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 NOT beneficiary designations ✦     Birth or adoption of a child or grandchild ✦     Death of a named beneficiary, executor, or trustee ✦     Significant change in assets — real estate purchase, sale, or inheritance ✦     A beneficiary developing a disability affecting Medicaid or SSI eligibility ✦     Relocating to or from Vermont ✦     Any change in your relationship with a named guardian, executor, or trustee 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 — 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. They are often the most financially significant documents you own.

Mistake #4: Outdated or Missing Beneficiary Designations

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 Designations •       An ex-spouse receives an entire life insurance payout because the divorce decree did not also change the policy designation •       A deceased beneficiary's share of a retirement plan passes directly into the probate estate, losing all tax-deferred treatment •       A person with special needs who receives a direct inheritance is 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 the beneficiary rather than the individual directly. Review these designations every time you review your will and trust.

Mistake #5: Creating a Trust but Never Funding It

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 — 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.

Funding a Trust Requires Specific Action for Each Asset Class ✦     Real estate: A deed must be recorded 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 ✦     Life insurance & retirement accounts: The trust should be named as beneficiary — retirement account 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. This makes 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. Do not leave the attorney's office without a clear action plan for each transfer. Any real estate should have a deed prepared and recorded as part of the trust signing process — not as a later afterthought that may never happen.

Mistake #6: No Durable Power of Attorney or Healthcare Directive

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 (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. Without the word 'durable,' a traditional power of attorney terminates automatically upon the principal's incapacity — exactly when it is needed most. For healthcare decisions, Vermont's Advance Directive under 14 V.S.A. Ch. 121 authorizes your agent to make medical decisions — including end-of-life decisions — when you cannot make them yourself.

If you become incapacitated without these documents, a family member must petition the Vermont Probate Division to be appointed your guardian under 14 V.S.A. Ch. 111. This is a public court proceeding that can take months, cost thousands of dollars in attorney and court fees, and require ongoing annual court supervision — all of which can be avoided with two relatively simple documents signed while you have legal capacity.

✦  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. Capacity is required at signing, and it can be lost without warning.

Mistake #7: Ignoring the Surviving Spouse's Elective Share

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 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.

Under 14 V.S.A. § 321, a voluntary transfer of property during marriage made 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. Transferring assets to an irrevocable trust or to children shortly before death to cut out a surviving spouse may be undone by the court.

✦  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 often requires a Qualified Terminable Interest Property (QTIP) trust or another structured arrangement. This is not a plan to attempt without an experienced Vermont estate planning attorney.

Mistake #8: Choosing the Wrong Executor or Trustee

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 You Have Chosen the Wrong Person •       Lives far from Vermont and is unable to travel to handle practical matters •       Has a history of financial difficulty, addiction, or conflict with other beneficiaries •       Is the same age as you — creating risk of simultaneous incapacity •       Has never formally agreed to serve or was named decades ago without re-confirmation •       Has a contentious relationship with the beneficiaries •       Lacks 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 in case your first choice cannot serve. For complex estates or situations involving family conflict, consider naming a professional fiduciary — a licensed trust company or bank trust department — as sole trustee or co-trustee. Discuss the role explicitly with your chosen person before naming them, and re-confirm their willingness every few years.

Mistake #9: Failing to Plan for Incapacity

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. This process can cost thousands of dollars, take months to complete — during which your finances may be frozen — and creates a permanent public court record.

Three Documents Every Vermont Adult Needs 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. Note: the trust must be funded to provide this benefit

✦  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, you may lose the ability to execute these documents at all — and at that point, only a guardianship petition can give another person legal authority to act for you.

Mistake #10: Failing to Plan for Digital Assets

Modern estate planning must account for digital assets — email accounts, social media profiles, online financial accounts, cryptocurrency holdings, digital photographs, subscription services, and more. 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. Under § 3554, a user must have expressly authorized disclosure during their lifetime — either through an online tool provided by the custodian (such as Google's Inactive Account Manager or Facebook's Legacy Contact feature) or through a will, trust, or power of attorney. Critically, 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 during your lifetime, your executor may be legally prohibited from accessing your email, managing your online accounts, or liquidating cryptocurrency — even with a detailed will and a fully funded trust. Federal privacy laws, including the Electronic Communications Privacy Act (18 U.S.C. § 2701), restrict access regardless of what your will says.

✦  The Fix Create a digital asset inventory listing all online accounts, usernames, 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 Chapter 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 and store them securely where your executor can find them.

Mistake #11: Waiting Too Long for Medicaid and Long-Term Care Planning

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.

Medicaid's 60-month (five-year) look-back period for institutional nursing home care means that 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. Vermont Medicaid is governed by federal law at 42 U.S.C. § 1396p and Vermont Agency of Human Services regulations.

Critical Fact: 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: ✦     Irrevocable trusts funded more than five years before applying for benefits ✦     Vermont Enhanced Life Estate Deed (27 V.S.A. Ch. 6) — allows real property to pass at death without triggering the look-back period in most cases ✦     Vermont community spouse resource allowance and minimum monthly maintenance needs allowance ✦     Federal caregiver child exception — allows 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.

Mistake #12: Not Reviewing Your Estate Plan Regularly

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. The failure to review and update is itself a serious estate planning mistake.

Recent Changes to Vermont Estate Planning Law •       Vermont Trust Code (14A V.S.A.): Enacted 2009 •       Vermont Revised Uniform Fiduciary Access to Digital Assets Act (14 V.S.A. Ch. 125): Enacted 2017 •       Vermont Uniform Power of Attorney Act (14 V.S.A. Ch. 127): Effective July 1, 2023 — replaced the prior statute entirely •       Uniform Directed Trust Act (14A V.S.A. Ch. 13): Effective May 13, 2024 Plans predating these laws may lack important protections and opportunities now available under Vermont law.

Events Requiring an Immediate Estate Plan Update ✦     Marriage, divorce, or a new civil union ✦     Birth or adoption of a child or grandchild ✦     Death of a named executor, trustee, or beneficiary ✦     A major change in assets — real estate or retirement accounts ✦     A beneficiary developing a serious disability that may require a special needs trust ✦     Moving to or from Vermont ✦     Any major change in federal or Vermont estate tax law Routine reviews without a specific triggering event should occur at least every 3 to 5 years.

✦  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.

Schedule a Consultation with Attorney Nicole Peck McPhee

Whether for estate planning and wills or trusts, a real estate transaction, business formation or acquisition, or a private adoption matter, the first step is a focused one-on-one consultation. Nicole will learn about your situation, clearly explain your legal options, and outline exactly what is needed and at what cost. Consultations are available in person in Rutland or by secure Google Meet for clients anywhere in Vermont.

Contact us at 802-775-4845 or by email at [email protected] or contact Nicole Peck McPhee, PC.