Vermont asset protection: an ordinary homestead, real entireties, and the country's first liability shield for a DAO

Vermont’s creditor protection is unremarkable for a conventional owner, and genuinely groundbreaking for one specific kind of organization. On the ordinary side, Vermont gives a homeowner a $125,000 homestead that a married couple cannot double, tenancy by the entireties for the marital home, and a standard charging order against an LLC interest. None of that makes Vermont an asset-protection destination. What makes Vermont unique is that it was the first state to wrap a decentralized autonomous organization, a DAO, in a legal entity, giving the organization legal personhood and its participants a liability shield through the blockchain-based LLC. That solves a problem most crypto organizers do not realize they have until a creditor comes looking. Take the ordinary protections first, then the one that is not ordinary at all.

The home, the homestead, and entireties

Start with the residence, where Vermont is solid but not exceptional.

Vermont’s creditor homestead protects $125,000 of home equity, and a married couple cannot double it.

Under 27 V.S.A. Section 101, the homestead exemption protects up to $125,000 of equity in a principal residence, along with associated rents and out-buildings, from most unsecured creditors. The amount is moderate, and Vermont is explicit that a husband and wife may not double it, so $125,000 is the ceiling for a couple as well as an individual, which is lower relative protection than a doubling state offers. For couples, Vermont adds a second, stronger shield.

Vermont recognizes tenancy by the entireties by statute, so a married couple’s home is exempt from a creditor of only one spouse.

Under 15 V.S.A. Section 67, property held by a married couple as tenants by the entirety is exempt against debts owed by only one spouse, a protection Vermont’s courts have long enforced. So a Vermont couple holding the home that way keeps it beyond a creditor of just one of them, which for many households is more valuable than the $125,000 homestead cap, because it can protect the entire home rather than a fixed dollar amount. The entireties page covers the doctrine. On the investment side, Vermont is ordinary.

Vermont’s charging order is a standard modern one, with foreclosure available and single-member LLCs weaker.

Under 11 V.S.A. Section 4074, a personal creditor of a member gets a charging order entitling it to distributions, but the statute permits foreclosure on the interest, so Vermont is not a foreclosure-barred state, and the single-member case is the weakest. The charging order protection and single-member LLC pages cover the mechanics; in Vermont a genuine multi-member structure preserves the protection. To reach an owner behind the entity, Vermont uses the usual alter-ego test of domination plus injustice, on the piercing the veil page.

The protection Vermont invented: a shield for a DAO

Here is where Vermont is unlike any state that came before it.

Without a legal wrapper, a DAO can be treated as a general partnership, exposing every participant to unlimited personal liability, and Vermont’s blockchain-based LLC is the fix.

A decentralized autonomous organization, a group coordinating through a blockchain and smart contracts rather than a traditional company, has a hidden legal problem: with no entity around it, a court can treat the DAO as a general partnership, and in a general partnership every partner is personally liable for the group’s obligations without limit. So the participants in an unwrapped DAO, who may never have met and may hold only tokens, can each be on the hook for the whole organization’s debts and liabilities. Vermont solved this first. Under its blockchain-based LLC statute, a DAO can form a Vermont LLC, elect blockchain-based status, and thereby gain legal personhood and, critically, the LLC liability shield for its participants. The first legally established DAO in the United States, dOrg, was formed exactly this way in 2019. The protection insight most crypto organizers miss is that decentralization does not create limited liability; an entity does, and Vermont was the first state to offer one built for the way a DAO actually operates. The governance mechanics are on the governance page.

The bottom line

Vermont’s creditor homestead protects $125,000 of equity under Section 101, and a married couple cannot double it.

Vermont recognizes tenancy by the entireties by statute under 15 V.S.A. Section 67, so a couple’s home is exempt from a creditor of one spouse.

The charging order under Section 4074 is ordinary, with foreclosure available, so a single-member Vermont LLC is the weak point.

Vermont was the first state to give a DAO legal personhood and a liability shield through the blockchain-based LLC, solving the general-partnership exposure an unwrapped DAO faces.

The blockchain-based LLC’s outward liability protection is real, but its internal governance and fiduciary questions are an unsettled frontier.

What this page does not cover

This page is about how creditors reach you in Vermont. How the blockchain-based LLC is governed by code, and the duties in a conventional Vermont LLC, are on the governance page. Vermont’s high income tax, the 3.4% transfer tax on investment property, and the lack of a series LLC are on the structure and cost page. The $125 formation fee and the blockchain-based election made at formation are on the filing page.

Last verified August 2026.