Vermont Estate Taxes

Vermont's estate tax is designed as a "pick-up" tax equal to the state death tax credit under federal estate tax law. However, for Vermont estate tax purposes, the applicable state death tax credit continues to be based on federal estate tax laws in effect on January 1, 2001. This means that the phase-out of the state death tax credit pursuant to 2002 changes in the federal law does not apply to Vermont's estate tax, and that estate tax is payable based on the credit in effect in 2001.

Deductions. Vermont essentially allows the same deductions from an estate as the federal estate tax deductions. For resident decedents, the Vermont gross estate is the federal gross estate, excluding real or tangible personal property located outside Vermont. For nonresident decedents, the Vermont gross estate is the same except that all intangible personal property is also excluded.

Returns. The Vermont estate tax return is generally due within nine months of the decedent's death unless an extension is granted. Any Vermont estate taxes owed must be paid within the filing period for the return.

Generation-skipping transfer tax. Vermont imposes a generation-skipping transfer tax equal to the federal credit as explained above. However, the Vermont tax is decoupled from the scheduled termination of the generation-skipping transfer tax credit after December 31, 2004.