Vermont Blended Family Estate Plan: Protecting Children from a First Marriage

A blended family creates a fundamental tension in estate planning that a simple will cannot resolve. You want to provide for your current spouse. You also want to ensure your children from a previous marriage receive their inheritance. Under Vermont law, these goals directly conflict — because your surviving spouse can reject your will entirely and claim half the probate estate.

Understanding this tension, and the specific tools Vermont law provides to address it, is the difference between a plan that holds and one that unravels after your death.

The Problem: Vermont's Elective Share

Under 14 V.S.A. § 319, a surviving spouse has the right to waive whatever the will provides and instead elect to receive one-half of the net probate estate. This means that if you write a will leaving everything to your children, your surviving spouse can file with the probate court and claim 50% of those assets.

The elective share must be exercised within four months of receiving notice of spousal rights or within four months of the estate inventory filing — whichever is later. But for a spouse who feels inadequately provided for, it's a powerful and virtually automatic claim.

On top of that, Vermont gives the surviving spouse a $125,000 homestead exemption (27 V.S.A. § 105), the right to household furnishings (14 V.S.A. § 312), and a family maintenance allowance (14 V.S.A. § 316). These claims come before any distributions under the will.

The Solution: Minimize What Passes Through Probate

Vermont's elective share applies only to the probate estate — assets that pass through court-supervised administration. Assets that transfer outside of probate are generally not included in the elective share calculation. This creates a clear strategy: move the assets you want your children to inherit into non-probate channels.

Enhanced Life Estate Deeds for Real Property

If you want your children from a first marriage to inherit your home or family camp, execute an Enhanced Life Estate Deed (Lady Bird Deed) naming them as the remainder beneficiaries. The property transfers directly to them at your death, outside of probate, and the surviving spouse's elective share doesn't reach it.

You retain full control during your lifetime — you can sell, mortgage, or revoke the deed without anyone's consent. And under Vermont's Medicaid estate recovery rules (Rule 4.108), the property is shielded from recovery claims because it never enters probate.

Beneficiary Designations on Financial Accounts

Name your children as direct beneficiaries on retirement accounts, life insurance policies, and Payable on Death bank accounts. These transfers happen automatically at death and bypass probate entirely.

The risk: if you name your current spouse as beneficiary on some accounts and your children on others, make sure the split reflects your actual intentions. Beneficiary designations override the will, so any mismatch creates confusion.

Credit Shelter Trust

For families near Vermont's $5 million estate tax threshold, a credit shelter trust (also called a bypass trust) serves a dual purpose. It preserves both spouses' non-portable state estate tax exemptions, and it can hold assets for the benefit of the surviving spouse during their lifetime while ensuring the principal eventually passes to your children.

The trust terms can allow the surviving spouse to receive income and even limited principal distributions, but the corpus is protected from the elective share claim because it doesn't pass through probate.

Irrevocable Trust

For assets you want completely shielded from both the elective share and potential Medicaid recovery, an irrevocable trust removes the assets from your estate entirely. The trade-off is that you give up control — once assets are in an irrevocable trust, you can't take them back.

What a Prenuptial Agreement Can Do

The only way to waive the elective share entirely is through a valid prenuptial or postnuptial agreement. If both spouses agree — with full financial disclosure and voluntary consent — each can waive their right to elect against the other's will.

For second marriages where both partners have children from prior relationships, a prenuptial agreement that addresses the elective share is the clearest solution. It lets each spouse direct their own assets to their own children without the risk of a post-death election claim.

The Intestacy Risk

If you're in a blended family and die without a will, Vermont's intestacy rules compound the problem. Under 14 V.S.A. § 311, if you have descendants who are not also descendants of your surviving spouse — children from a prior marriage — the spouse receives exactly one-half of the intestate estate. Your children from the first marriage share the other half.

But remember, the homestead exemption, personal property exemption, and family allowance all come off the top first. In a modest estate, the surviving spouse's cumulative claims can leave very little for children from the first marriage.

Building the Plan

The most effective blended family estate plan in Vermont layers multiple non-probate tools:

1. Prenuptial agreement waiving the elective share (if possible)
2. Enhanced Life Estate Deed transferring real property directly to your children
3. Beneficiary designations on financial accounts naming your children
4. A will distributing the remaining probate estate — knowing the surviving spouse may still elect against it
5. A trust (credit shelter or irrevocable) for high-value assets that need ongoing management

The Vermont Basic Estate Planning Kit includes a coordination checklist for blended families that walks through each of these tools with Vermont-specific filing instructions.

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