Estate Planning for Vermont’s Second Homeowners
December 18, 2024

Vermont is a beloved destination for second homeowners. Whether your Vermont property is a summer lake house, a winter ski chalet, or a peaceful rural retreat, it’s more than just real estate—it’s a place where memories are made and family traditions grow.


But second homes also come with unique estate planning considerations. If you own or are thinking about purchasing a second home in Vermont, a well-crafted estate plan can help you preserve this special place for future generations while avoiding unnecessary legal complications.


Why Second Homes Require Special Estate Planning Attention


Unlike your primary residence, a second home is often shared among family members, passed down over time, or even used as a rental property. That means your estate plan needs to address not just ownership and transfer, but also questions of usage, maintenance, taxes, and future conflicts.


Some key considerations include:


  • Who will inherit the home?
    Leaving a second home to multiple heirs can sometimes lead to disagreements, especially if expectations aren’t clear or if one heir wants to sell while others want to keep the property.
  • How will expenses be handled?
    Property taxes, utilities, insurance, and upkeep can add up. Without a clear plan, heirs may be left wondering who’s responsible—and disputes can arise.
  • What if the home is out-of-state for the heirs?
    Travel distance, local regulations, and logistics may affect your heirs’ ability to manage or enjoy the property.


By addressing these questions in your estate plan, you can protect your investment and reduce the risk of family conflict.


Planning Tools for Vermont Second Homeowners


Fortunately, there are several estate planning tools available to help you structure the future of your Vermont property. The right choice depends on your family dynamics, financial goals, and long-term vision for the home.


  1. Revocable Living Trusts: Placing your second home in a revocable living trust can help avoid probate in Vermont, especially if you live in another state. This keeps the transfer of your property private, expedient, and less costly. You can also use the trust to outline how the property should be used or managed.
  2. Limited Liability Companies (LLCs): Some families choose to transfer ownership of a second home to an LLC. This can provide liability protection, allow for shared ownership among heirs, and include operating agreements that spell out decision-making rules, usage schedules, and buyout provisions.
  3. Life Estate Deeds: This option allows you to retain the right to live in or use the home during your lifetime, while automatically transferring ownership to your chosen beneficiaries upon your death. However, it can limit your ability to sell or refinance, so it’s best used in specific situations.
  4. Co-Ownership Agreements: If you’re planning to leave the home to more than one heir, consider creating a co-ownership agreement as part of your estate plan. This agreement can address maintenance duties, expense sharing, scheduling usage, and what happens if someone wants to sell their share.
  5. Vacation Home Trusts: These specialized trusts are designed for families who want to keep a vacation home in the family for generations. They can include rules about use, maintenance funding, and succession planning.


Don’t Forget the Tax Implications


Vermont does not currently impose an estate tax for estates under $5 million (as of 2025), but federal estate tax and capital gains issues may still apply. If you purchased your second home decades ago, your beneficiaries could face significant taxes upon sale unless the property is transferred in a tax-efficient manner.


Proper planning—such as using a trust or updating the property's cost basis through inheritance—can help mitigate these consequences.


Keep Your Plan Updated


As life circumstances change, so should your estate plan. Marriage, divorce, the birth of grandchildren, changes in tax law, or a decision to rent out the home seasonally can all affect how your second home should be treated in your estate plan. Regular reviews with an estate planning attorney ensure your plan remains current and reflective of your goals.

 

Plan for Peace of Mind—Contact Deppman Law PLC


If you own a second home in Vermont—or plan to—now is the time to start thinking about how to protect it for the future. At Deppman Law PLC, we understand the unique considerations facing second homeowners and offer customized estate planning services tailored to Vermont property owners. Contact us today and let us help you create a plan that keeps your family retreat exactly that—a place for family, not for disputes.

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