State Estate Taxes - Update on Vermont Estate Taxes

Back on May 29 I wrote about the current laws governing the estates of Vermont residents and nonresidents who own real estate and tangible personal property located in Vermont. Well, it turns out that on June 2, 2009, the Vermont legislature overrode Gov. Jim Douglas' veto of a bill that reduced Vermont's state estate tax exemption from $3,500,000 down to $2,000,000. To make matters even worse, the $2,000,000 state estate tax exemption has been made retroactive to January 1, 2009.

The bottom line - for the estates of decedents affected by Vermont estate taxes dying on or after January 1, 2009, the threshold for a taxable estate is only $2,000,000, leaving a gap of $1,500,000 between the state exemption and the federal exemption. Aside from this, Vermont doesn't allow for a state QTIP election through the use of ABC Trust planning, so residents and nonresidents owning real and tangible personal property located in Vermont need to be aware of the state estate tax exemption gap.

• Understanding Death, Estate and Inheritance Taxes
• Vermont Estate Taxes - A Recent Boon for the State
• Understanding the State Estate Tax Exemption Gap
• What is an ABC Trust?
• Which States Allow for ABC Trust Planning?