SCHEDULE 14A
                     INFORMATION REQUIRED IN PROXY STATEMENT

                            SCHEDULE 14A INFORMATION

                    Proxy Statement Pursuant to Section 14(a)
                     of the Securities Exchange Act of 1934

                               (Amendment No.   )


Filed by the Registrant                       [X]
Filed by a party other than the Registrant    [ ]
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         14a-6(e)(2))
   [X]   Definitive Proxy Statement
   [ ]   Definitive Additional Materials
   [ ]   Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

                           UNION BANKSHARES, INC.
---------------------------------------------------------------------------
             (Name of Registrant as Specified in Its Charter)


---------------------------------------------------------------------------
  (Name of Person(s) Filing Proxy Statement, if other than the Registrant)


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                           Union Bankshares, Inc.
                           ----------------------
                            20 Lower Main Street
                                 PO Box 667
                            Morrisville, VT 05661
                                802-888-6600

                                                             April 18, 2005

Dear Shareholder,

The 114th Annual Meeting of the Shareholders of Union Bankshares, Inc. will 
be held May 18th at 3:00 p.m. at the offices of Union Bank, located at 20 
Lower Main Street, Morrisville, Vermont. You are cordially invited to 
attend.

Enclosed with this mailing is a Notice of Annual Meeting, a Proxy Statement 
and a Proxy Card for voting your shares.

Also enclosed is a copy of the Annual Report of Union Bankshares, Inc. and 
its wholly-owned subsidiary, Union Bank, for the year ended December 31, 
2004. The report includes a letter to shareholders, audited consolidated 
financial statements, summary of financial highlights, management's 
discussion and analysis of financial results, and other information about 
the Company.

Your attendance and vote at the annual meeting are important. We hope you 
will join us immediately following the meeting for light refreshments and 
an informal gathering of shareholders, directors and bank officers.

Sincerely,

/s/ Kenneth D. Gibbons

Kenneth D. Gibbons
President and CEO


  


                           Union Bankshares, Inc.
                           ----------------------

                                  NOTICE OF
                     2005 ANNUAL MEETING OF SHAREHOLDERS
                    TO BE HELD ON WEDNESDAY, MAY 18, 2005

To the Shareholders of
Union Bankshares, Inc.:

The Annual Meeting of Shareholders of Union Bankshares, Inc. will be held 
at 3:00 p.m., local time, on Wednesday, May 18, 2005, at the banking 
offices of Union Bank, 20 Lower Main Street, Morrisville, Vermont, for the 
following purposes:

      1.  To fix the number of directors at eight for the ensuing year and 
          to elect eight directors (or such lesser number as circumstances 
          may warrant), all of whom will serve for one-year terms and until 
          their successors are elected and qualified; and

      2.  To consider and act upon any other business which may properly 
          come before the meeting or any adjournment thereof.

The Board of Directors has fixed the close of business on April 1, 2005 as 
the record date for the determination of shareholders entitled to notice 
of, and to vote at, the meeting or any adjournment of the meeting.

                                       By Order of the Board of Directors,

                                       /s/ Robert P. Rollins

                                       Robert P. Rollins
                                       Secretary

Morrisville, Vermont
April 18, 2005

                           YOUR VOTE IS IMPORTANT

PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED, 
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING IN PERSON. SHOULD 
YOU ATTEND THE MEETING YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON IF 
YOU SO DESIRE.


  


                              TABLE OF CONTENTS

PROXY STATEMENT                                                           1
INFORMATION ABOUT THE MEETING                                             1
  Why have I received these materials?                                    1
  Who is entitled to vote at the annual meeting?                          1
  How do I vote my shares at the annual meeting?                          1
  Can I change my vote after I return my proxy card?                      2
  Can I vote at the meeting instead of voting by proxy?                   2
  What is a broker non-vote?                                              2
  What constitutes a quorum for purposes of the annual meeting?           2
  What vote is required to approve matters at the annual meeting?         2
  Do broker non-votes affect the outcome of shareholder votes?            3
  How does the Board recommend that I vote my shares?                     3
  How are proxies solicited?                                              3
  Who pays the expenses for soliciting proxies?                           3
SHARE OWNERSHIP INFORMATION                                               3
  Share Ownership of Management and Principal Holders                     3
  Section 16(a) Beneficial Ownership Reporting Compliance                 5
PROPOSAL 1: TO ELECT DIRECTORS                                            5
  Directors' Compensation                                                 6
  Attendance at Directors Meetings                                        7
  Director Independence                                                   7
  Board Committees and Corporate Governance                               7
  Audit Committee                                                         7
  Compensation Committee                                                  8
  Nominating Functions                                                    8
  Shareholder Recommendations for Board Nominations                       9
  Codes of Ethics                                                         9
  Attendance at Annual Meeting of Shareholders                            9
  Communicating with the Board                                           10
  Transactions with Management and Directors                             10
  Compensation Committee Interlocks and Insider Participation            10
  Vote Required                                                          10
AUDIT COMMITTEE REPORT                                                   11
COMPENSATION COMMITTEE REPORT                                            12
STOCK PERFORMANCE GRAPH                                                  14
EXECUTIVE OFFICERS                                                       15
EXECUTIVE COMPENSATION                                                   16
  Summary Compensation Table                                             16
  Benefit Plans                                                          17
  Union Bankshares, Inc. Incentive Stock Option Plan                     17
  Union Bankshares, Inc. Deferred Compensation Plan                      18
  Union Bank Defined Benefit Pension Plan                                19
  Union Bank 401(k) and Profit Sharing Plan                              20
  Union Bank Discretionary Bonus Payments                                20
  Other Employee Benefit Plans                                           20
INDEPENDENT AUDITORS                                                     20
  Change in Independent Auditors                                         20
  Audit Fees                                                             21
  Audit Committee Pre-Approval Guidelines                                22
SHAREHOLDER PROPOSALS                                                    22
OTHER MATTERS                                                            23


  


                           UNION BANKSHARES, INC.
                            20 Lower Main Street
                            Morrisville, VT 05661

                               PROXY STATEMENT

                       Annual Meeting of Shareholders

                                May 18, 2005

                        INFORMATION ABOUT THE MEETING

Why have I received these materials?

We are sending you this proxy statement and the accompanying proxy card to 
solicit your vote, on behalf of the Board of Directors, for action at the 
annual meeting of the shareholders of Union Bankshares, Inc. (the 
"Company," "we" or "our") to be held at 3:00 p.m. local time on Wednesday, 
May 18, 2005, at the offices of our subsidiary, Union Bank, at 20 Lower 
Main Street, Morrisville, Vermont. This proxy statement and proxy card are 
accompanied by the Company's Annual Report to Shareholders for the year 
ended December 31, 2004, which contains the Company's audited consolidated 
financial statements. These materials were first sent to shareholders on or 
about April 18, 2005. You are cordially invited to attend the annual 
meeting and are requested to vote on the proposal to elect directors, as 
described in this proxy statement.

Who is entitled to vote at the annual meeting?

Holders of the Company's common stock, $2.00 par value per share, as of the 
close of business on April 1, 2005 (the record date for the meeting), will 
be entitled to vote at the annual meeting. On April 1, 2005, there were 
outstanding and entitled to vote 4,554,663 shares of the Company's common 
stock, each of which is entitled to one vote on each matter presented for 
vote at the annual meeting. At this time, the only matter we are aware of 
that will be presented for vote at the meeting is the election of 
directors.

How do I vote my shares at the annual meeting?

If you are a shareholder of record of the Company's common stock, you may 
complete and sign the accompanying proxy card and return it in the enclosed 
postage-paid envelope, or you may deliver it in person to the Corporate 
Secretary or the Assistant Corporate Secretary at the offices of Union 
Bank. You are a shareholder of record if you hold your stock in your own 
name on the Company's shareholder records maintained by our transfer agent 
and wholly-owned subsidiary, Union Bank.

"Street name" shareholders of common stock, who wish to vote at the annual 
meeting will need to obtain a proxy form from the institution that holds 
their shares and follow the instructions on that form. Street name 
shareholders are shareholders who hold their common stock indirectly, 
through a bank, broker or other nominee.


  


Can I change my vote after I return my proxy card?

Yes, after you have submitted a proxy, you may change your vote at any time 
before the proxy is exercised at the annual meeting.

Shareholders of record may change their vote by submitting a written notice 
of revocation or a proxy bearing a later date. You may file a notice of 
revocation or request a new proxy by contacting the Assistant Corporate 
Secretary, JoAnn Tallman at Union Bank, 20 Lower Main Street, Morrisville, 
VT 05661 or by calling 802-888-6600. 

"Street name" shareholders who wish to change their vote should contact the 
institution that holds their shares and follow the applicable procedures 
prescribed by the institution.

Can I vote at the meeting instead of voting by proxy?

Yes, a ballot will be available at the annual meeting for shareholders of 
record who wish to vote in person. However, we encourage you to complete 
and return the enclosed proxy card to be certain that your shares are 
represented and voted, even if you should be unable to attend the meeting 
in person. If you wish, you may revoke your previously given proxy at the 
annual meeting and vote by ballot instead.

What is a broker non-vote?

Under brokerage industry practices, a broker may generally vote the shares 
it holds for customers on routine matters, but requires voting instructions 
from the customer on other, nondiscretionary matters. A broker non-vote 
occurs when a broker votes less than all of the shares it holds of record 
for any reason, including with respect to nondiscretionary matters where 
customer instructions have not been received. The "missing" votes in such a 
case are broker non-votes.

What constitutes a quorum for purposes of the annual meeting?

The presence at the annual meeting in person or by proxy of the holders of 
a majority of the outstanding shares of common stock entitled to vote will 
constitute a quorum for the transaction of business. Proxies marked as 
"WITHHOLD AUTHORITY" on the election of directors, or marked as abstaining 
(including proxies containing broker non-votes) on any matter to be acted 
on by the shareholders will be treated as present at the meeting for 
purposes of determining a quorum but will not be counted as votes cast on 
such matters.

What vote is required to approve matters at the annual meeting?

The election of directors at the annual meeting requires the affirmative 
vote of a plurality of the votes cast. That means that the nominees who 
receive the highest number of vote totals for the number of vacancies to be 
filled will be elected as directors. Therefore, a vote to withhold 
authority for any nominee or the entire slate will not affect the outcome 
of the election unless there are more nominees than there are vacancies to 
be filled.

In order to be approved, any other matter that may be voted on at the 
meeting would require that more votes be cast in favor of the proposal than 
against it. As noted above, management of the Company is


  2


not aware at this time of any matter that may be submitted to vote of the 
shareholders at the annual meeting other than the election of directors.

Do broker non-votes affect the outcome of shareholder votes?

Broker non-votes, while considered present and entitled to vote for 
purposes of determining a quorum, are not considered to be "votes cast." 
Because election of directors is by plurality vote, and, if presented, any 
other matters would be approved if more votes are cast for than against, 
broker non-votes would not affect the outcome of any such shareholder vote.

How does the Board recommend that I vote my shares?

The Board of Directors recommends that you vote FOR the proposal to set the 
number of directors for the ensuing year at eight and to elect the eight 
nominees listed in this proxy statement.

The proxy card gives you the ability to vote for, or withhold authority 
from voting, as to the entire slate of directors, or as to individual 
nominee(s). If you vote by proxy, your shares will be voted in the manner 
you indicate on the proxy card. If you sign and return your proxy card but 
do not specify how you want your shares to be voted, the persons named as 
proxy holders on the proxy card will vote your shares in accordance with 
the recommendations of the Board of Directors.

How are proxies solicited?

Proxies are being solicited by mail. Proxies may also be solicited by 
directors, officers or employees of the Company or Union Bank, in person or 
by telephone, facsimile, or electronic transmission. Those individuals will 
not receive any additional compensation for such solicitation.

Who pays the expenses for soliciting proxies?

The Company pays the expenses for soliciting proxies for the annual 
meeting. These expenses include costs relating to preparation, mailing and 
returning of proxies. In addition, we may reimburse banks, brokers or other 
nominee holders for their expenses in sending proxy materials to the 
beneficial owners of our common stock.

                         SHARE OWNERSHIP INFORMATION

Share Ownership of Management and Principal Holders

The following table shows the number and percentage of outstanding shares 
of the Company's common stock owned beneficially as of March 15, 2005 by:

      *  each incumbent director and nominee for director of the Company;
      *  each executive officer of the Company named in the summary 
         compensation table included elsewhere in this proxy statement;
      *  all of the Company's directors and executive officers as a group; 
         and
      *  each person (including any "group," as that term is used in 
         Section 13(d)(3) of the Securities Exchange Act of 1934), known to 
         the management of the Company to own beneficially more than 5% of 
         the Company's outstanding common stock.


  3


Except as otherwise indicated in the footnotes to the table, the named 
individuals possess sole voting and investment power over the shares 
listed.




                                                                         Shares
                                                                      Beneficially       Percent
Shareholder or Group                                                      Owned          of Class
-------------------------------------------------------------------------------------------------

                                                                                     
Directors, Nominees and/or Executive Officers:
Cynthia D. Borck                                                       6,529 (1)             .14
Steven J. Bourgeois                                                    1,388 (2)             .03
William T. Costa, Jr.                                                 25,942 (3)             .57
Kenneth D. Gibbons                                                    60,944 (4)            1.33
Franklin G. Hovey, II                                                603,928 (5)(10)       13.22
Richard C. Marron                                                      3,065 (6)             .07
Marsha A. Mongeon                                                      1,298 (7)             .03
Robert P. Rollins                                                      5,133                 .11
Richard C. Sargent                                                   594,943 (8)           13.03
John H. Steel                                                          5,500 (9)             .12

All Directors, Nominees and Executive Officers as a Group (10):    1,308,670               28.65

Other 5% or more Shareholders:
Genevieve L. Hovey Trust                                             422,908 (10)           9.26
Susan Hovey Mercia                                                   603,713 (10)(11)      13.22
Walter M. Sargent Revocable Trust                                    379,836 (12)           8.32


--------------------
  Ms. Borck has shared voting and investment power over 5,279 of the 
      shares listed. Includes 1,250 shares Ms. Borck has the right to 
      acquire under presently exercisable incentive stock options.
  Mr. Bourgeois has shared voting and investment power over all shares 
      listed.
  Mr. Costa has shared voting and investment power over all shares 
      listed.
  Mr. Gibbons has shared voting and investment power over 25,174 of the 
      shares listed. Includes 10,000 shares Mr. Gibbons has the right to 
      acquire under presently exercisable incentive stock options. 
  Mr. Hovey, II has shared voting and investment power over 596,534 of 
      the shares listed, including the 422,908 shares held in the Genevieve 
      L. Hovey Trust. 
  Mr. Marron has shared voting and investment power over all but 265 of 
      the shares listed.
  Includes 500 shares Ms. Mongeon has the right to acquire under 
      presently exercisable incentive stock options.
  Mr. Richard Sargent has shared voting power over 594,928 of the 
      shares listed. The total includes 162,000 shares held by the Copley 
      Fund, a charitable trust of which Mr. Sargent serves as co-trustee. 
      Mr. Sargent does not have any beneficial interest in the fund and 
      disclaims beneficial ownership of all 162,000 shares held by the 
      fund. The total also includes 379,836 shares held by the Walter M. 
      Sargent Revocable Trust, of which Mr. Sargent and members of his 
      family are beneficiaries and of which he is a co-trustee. 
  Mr. Steel's total includes 1,500 shares held as custodian for his 
      minor children under the Uniform Transfers to Minors Act. 
 Mr. Hovey, II and his sister, Susan Hovey Mercia, are co-trustees and 
      beneficiaries of the Genevieve L. Hovey Trust. All of the shares held 
      by the trust are included in the share totals in this table for both 
      Mr. Hovey, II and Ms. Mercia. Each of them disclaims beneficial 
      interest in one-half of such shares, in which the other has a 
      pecuniary interest.

                   (footnotes continued on following page)


  4


 Mrs. Mercia has shared voting and investment power over 596,533 of 
      the shares listed, including the 422,908 shares held in the Genevieve 
      L. Hovey Trust.
 All 379,836 shares are included in the share total disclosed 
      elsewhere in this table as beneficially owned by Richard C. Sargent, 
      who is a co-trustee of the Trust and of which he and members of his 
      family are beneficiaries.


                            --------------------

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's 
executive officers, directors and ten percent or more shareholders to file 
with the Securities and Exchange Commission ("SEC") reports of their 
ownership and changes in ownership of the Company's equity securities and 
to furnish the Company with copies of all such reports. Based solely on its 
review of copies of Section 16 reports received by it, or on written 
representations from certain reporting persons that no filings were 
required for them, the Company believes that during 2004 all Section 16(a) 
filing requirements applicable to its officers, directors and ten percent 
or more shareholders were complied with.

                       PROPOSAL 1: TO ELECT DIRECTORS

The Company's Amended and Restated Articles of Incorporation and By-laws 
provide for a Board of at least three directors, with the exact number to 
be fixed by the shareholders at each annual meeting. The Board of Directors 
currently consists of eight individuals. Director William T. Costa, Jr. has 
reached the mandatory retirement age (72) under the Company's By-laws and 
therefore will retire from the Boards of the Company and Union Bank as of 
the 2005 annual meeting. The Board of Directors has nominated businessman 
and former bank executive Steven J. Bourgeois to fill the vacancy created 
by Mr. Costa's retirement. This year the Board has recommended that the 
shareholders again fix the number of directors for the ensuing year at 
eight, or such lesser number as circumstances require should any of the 
nominees be unable to serve. Mr. Bourgeois and each of the incumbent 
directors, other than Mr. Costa, will stand for election to a one-year 
term.


  5


The table below contains certain biographical information about each of the 
nominees standing for election to the Board.




                             Served as
                             Director
Name and Age                 Since (1)    Principal Occupation for Past Five Years
---------------------------------------------------------------------------------------

                                    
Cynthia D. Borck, 54            1995      Vice President - Union Bankshares, Inc. and
                                          Executive Vice President-Union Bank
                                          Morrisville, VT

Steven J. Bourgeois, 56            -      Chief Executive Officer and Principal Owner,
                                          Strategic Initiatives for Business LLC 
                                          St. Albans, VT (business consulting), 2002-present.
                                          Previously, Regional President, Banknorth-Vermont,
                                          Burlington, VT and President and Chief Executive
                                          Officer, Franklin-Lamoille Bank, St. Albans, VT

Kenneth D. Gibbons, 58          1989      President and Chief Executive Officer-Union
                                          Bankshares, Inc. and Union Bank
                                          Morrisville, VT

Franklin G. Hovey, II, 55       1999      President, Hovey Enterprises, Inc. 
                                          St. Johnsbury, VT (real estate)

Richard C. Marron, 67           1998      Owner, Town and Country Motor Lodge
                                          Stowe, VT

Robert P. Rollins, 66           1983      Insurance Agent
                                          Morrisville, VT

Richard C. Sargent, 66          1982      Attorney at Law
                                          Richard Sargent Law Office
                                          Morrisville, VT

John H. Steel, 55               2002      Owner, President and Treasurer,
                                          Steel Construction, Inc.
                                          Stowe, VT


--------------------
  Does not include prior service with Union Bank and/or Citizens 
      Savings Bank and Trust Company ("Citizens") (merged into Union Bank 
      in May, 2003). Each director and nominee is also a director of Union 
      Bank.



Directors' Compensation

All directors of the Company, including Mr. Gibbons and Ms. Borck (who are 
employees of Union Bank), receive an annual retainer of $6,690 for service 
on the Company's Board of Directors, but do not receive any per meeting 
fees. Each non-employee director of the Company also receives fees for his 
service as a director of Union Bank, as described below.


  6


Non-employee directors of Union Bank receive an annual retainer of $5,160 
and a per meeting fee of $511, but do not receive any additional fees for 
attendance at committee meetings. During 2004, Mr.Gibbons and Ms. Borck 
were not separately compensated for their service as directors of Union 
Bank. All Company director fees paid to Mr. Gibbons and Ms. Borck are 
disclosed in the summary compensation table and footnotes set forth 
elsewhere in this proxy statement under the caption "EXECUTIVE 
COMPENSATION-Summary Compensation Table."

Non-employee directors who serve on the Compensation and Audit Committees 
of the Company are paid annual retainers for their service on the 
respective committees. Committee members are paid $1,000 annually while the 
Chairs are paid $1,500 annually.

Certain Directors of the Company participate in the Union Bankshares, Inc. 
Deferred Compensation Plan, described below under the caption "EXECUTIVE 
COMPENSATION-Union Bankshares, Inc. Deferred Compensation Plan."

Attendance at Directors Meetings

During 2004, the Company's Board of Directors held 11 regular meetings and 
no special meetings. All incumbent directors attended at least 82% of the 
aggregate of all such meetings and meetings of Board committees of which 
they were members. In addition to serving on the Company's Board, all of 
the Company's incumbent directors also serve on the Board of Directors of 
Union Bank and its committees, as does nominee Steven J. Bourgeois, who was 
appointed to the Bank's board of directors in February, 2005. The Board of 
Union Bank meets at least twice monthly.

Director Independence

The Board of Directors has determined that each of the directors, except 
Mr. Gibbons and Ms. Borck, who are executive officers of the Company and 
Union Bank, are independent within the meaning of American Stock Exchange 
(AMEX) rules for listed companies. Under these rules, a director is 
generally not considered to be independent if he or she has a material 
relationship with the listed company (including an employment relationship) 
that would interfere with the exercise of independent judgment.

Board Committees and Corporate Governance

As further described below, the Company's Board of Directors maintains two 
standing committees, the Audit Committee and the Compensation Committee, 
and all independent directors on the Board serve the function of a 
nominating committee.

Audit Committee. The Audit Committee comprises directors Robert Rollins 
(Chair), Franklin Hovey, II and Richard Marron. AMEX rules for listed 
companies and applicable securities laws require that the Company have an 
Audit Committee consisting of at least three directors, each of whom is 
independent. AMEX rules also require that all members of a listed company's 
audit committee be able to read and understand fundamental financial 
statements, including a company's balance sheet, income statement and cash 
flow statement, and require that at least one member of the committee qualify 
as "financially sophisticated," based on past employment experience in finance 
or accounting, professional accounting certification or other comparable 
experience or background. Similarly, SEC rules require that at least one 
member of the Audit Committee qualify as a "financial expert." The Board of 
Directors, in its discretion, and based on all of the information available 
to it, has determined that each of the members of the Audit Committee is 
independent under applicable legal


  7


standards and that Mr. Marron is "financially sophisticated" within the 
meaning of the AMEX rules and is a "financial expert" within the meaning of 
applicable SEC rules.

The Audit Committee is responsible for selecting the independent auditors 
and determining the terms of their engagement, for reviewing the reports of 
the Company's internal and external auditors, for monitoring the Company's 
adherence to accounting principles generally accepted in the United States 
of America and for overseeing the quality and integrity of the accounting, 
auditing and financial reporting practices of the Company and its system of 
internal controls. In addition, the Audit Committee has established 
procedures for the confidential reporting of complaints (including 
procedures for anonymous complaints by employees) on matters of accounting, 
auditing or internal controls. 

During 2004, the Company's Audit Committee met 14 times. A report of the 
Audit Committee on its 2004 activities is included elsewhere in this proxy 
statement under the caption "AUDIT COMMITTEE REPORT."

Compensation Committee. The Compensation Committee comprises directors 
Richard Sargent (Chair), William Costa and Robert Rollins. The Board has 
determined that each of such directors is independent under applicable AMEX 
rules for listed companies. The Compensation Committee evaluates, reviews 
and makes decisions or recommendations on executive salary levels, bonuses, 
stock option awards and benefit plans.

During 2004, the Compensation Committee met four times. A report of the 
Compensation Committee is set forth elsewhere in this proxy statement under 
the caption "COMPENSATION COMMITTEE REPORT."

Nominating Functions. In lieu of a separate committee, the functions of a 
nominating committee are performed by all of the Company's independent 
directors (all directors other than Mr. Gibbons and Ms. Borck, who are 
executive officers of the Company and Union Bank). The Board has elected 
not to establish a separate nominating committee at this time in order to 
obtain the widest possible input on the nominations process from all of the 
independent, non-management directors. 

The independent directors have adopted a resolution addressing the process 
for director nominations, including recommendations by shareholders and 
minimum qualifications for director nominees. In accordance with these 
criteria, directors and director candidates should possess the following 
attributes:

      *  Strong personal integrity;
      *  Previous leadership experience in business or administrative 
         activities;
      *  Ability and willingness to contribute to board activities, 
         committees, and meetings;
      *  Willingness to apply sound and independent business judgment;
      *  Loyalty to the Company and concern for its success;
      *  Awareness of a director's role in the Company's corporate 
         citizenship and image;
      *  Willingness to assume broad, fiduciary responsibility;
      *  Familiarity with the Company's service area; and
      *  Qualification as an independent director under applicable AMEX 
         rules for listed companies.

All nominees for election at the annual meeting, except Steven J. 
Bourgeois, are incumbent directors. Mr. Bourgeois has been personally known 
by several members of the Board and management since his tenure at 
Banknorth N.A. and the Franklin-Lamoille Bank. Since the opening of Union 
Bank's


  8


Fairfax, Vermont branch office in April, 2002, the directors and management 
became more aware of Mr. Bourgeois and his knowledge of the Franklin County 
market. This was timely as the Company was searching for suitable director 
candidates in connection with Union Bank's expansion into the St. Albans 
market with the opening of a loan production office in January, 2005. After 
consideration of Mr. Bourgeois' qualifications, the independent directors 
concluded that he met the criteria outlined above, and recommended that he 
be nominated for election to the Company's Board of Directors at the annual 
meeting. Mr. Bourgeois was appointed to the Board of Directors of Union 
Bank in February, 2005.

Shareholder Recommendations for Board Nominations. Shareholders of record 
wishing to offer recommendations to the independent directors of 
individuals for consideration as possible director nominees should submit 
the following information, in writing, at least ninety days before the 
annual meeting of shareholders: the name, address and share ownership of 
the shareholder making the recommendation; the proposed nominee's name, 
address, biographical information and number of shares beneficially owned 
(if available); and any other information that the recommending shareholder 
believes may be pertinent to assist in evaluating the nominee. The 
information should be delivered in person to the Assistant Corporate 
Secretary, JoAnn Tallman, at the main office of Union Bank, 20 Lower Main 
Street, Morrisville, Vermont, or mailed to: Chairman, Union Bankshares, 
Inc., P.O. Box 1346, Morrisville, VT 05661. The independent directors will 
use the same criteria to evaluate an individual recommended by a 
shareholder as they do other potential nominees. The recommending 
shareholder will be notified of the action taken on his or her 
recommendation.

Any beneficial owner of shares who is not a shareholder of record who 
wishes to recommend a person for consideration as a board nominee must make 
appropriate arrangements with such owner's (record) nominee holder to 
submit the recommendation through such nominee.

During the course of evaluating a potential nominee, the independent 
directors may contact him or her for additional background and other 
information as they deem advisable, and may choose to interview the 
potential nominee in an effort to determine his or her qualifications under 
the specified criteria, as well as their understanding of director 
responsibilities. The independent directors will then determine if they 
will recommend the nominee to the shareholders. No person will be nominated 
unless he or she consents in writing to the nomination and to being named 
in the Company's proxy statement and agrees to serve, if elected.

Codes of Ethics

The Board expects all directors, as well as all officers and employees, to 
maintain the highest standards of professionalism and business ethics. All 
directors, officers and employees are required to adhere to the Company's 
Code of Ethics, which is contained in the Union Bank Employee Handbook. 
That Code of Ethics is filed with the SEC as exhibit 14(ii) to the 
Company's 2003 Annual Report on Form 10-K. In addition, President and CEO 
Kenneth Gibbons and Vice President, Treasurer and CFO Marsha Mongeon are 
subject to a separate Code of Ethics for Senior Financial Officers and the 
Chief Executive Officer. That Code of Ethics is filed with the SEC as 
exhibit 14(i) to the Company's 2004 Annual Report on Form 10-K. The 
Company's Annual Reports on Form 10-K are available on the SEC's website at 
www.sec.gov.

Attendance at Annual Meeting of Shareholders

The Board of Directors has adopted a policy stating that incumbent 
directors and nominees are expected to attend the Annual Meeting of 
Shareholders, absent exigent circumstances, such as illness, family 


  9


emergencies and unavoidable business travel. Last year, all eight incumbent 
directors attended the annual meeting.

Communicating with the Board

Shareholders who wish to do so may communicate in writing with the Board of 
Directors, its committees, or individual directors regarding matters 
relating to the Company's business operations, financial condition or 
corporate governance. Any such communication should be addressed to the 
Board of Directors, or Board committee or individual director, as 
applicable, c/o Union Bankshares, Inc., P.O. Box 1346, Morrisville, VT 
05661. The correspondence will be forwarded to the addressee for review and 
response, as appropriate in the circumstances.

Transactions with Management and Directors

Some of the incumbent directors and executive officers of the Company, and 
some of the corporations and firms with which these individuals are 
associated, are customers of Union Bank in the ordinary course of business, 
or have loans outstanding from such bank, and it is anticipated that they 
will continue to do business with Union Bank in the future. All loans to 
such persons or entities were made in the ordinary course of business, do 
not involve more than normal risk of collectibility or present other 
unfavorable features, and were made on substantially the same terms, 
including interest rates and collateral, as those prevailing at the same 
time for comparable transactions by Union Bank with unaffiliated persons, 
although directors were generally allowed the lowest interest rate given to 
others on comparable loans.

Union Bank leases its Green Mountain Mall branch facility from a real 
estate corporation of which director William T. Costa, Jr. is a principal. 
The lease provides for minimum annual rentals of $28,000 and expires on 
June 30, 2005. Subsequent to year end, the lease was renewed until June 30, 
2010, at the same minimum annual rental. Under certain conditions, the 
Company may terminate the lease prior to expiration of the renewal term.

Compensation Committee Interlocks and Insider Participation

The Company is not aware of the existence of any interlocking relationships 
between the senior management of the Company and that of any other company.

Vote Required

Unless authority is withheld, proxies solicited hereby will be voted to fix 
the number of directors at eight and in favor of each of the eight nominees 
listed above to serve a one-year term expiring at the 2006 annual meeting 
of shareholders, or until their successors are elected and qualify. If for 
any reason not now known by the Company any of such nominees should not be 
able to serve, proxies will be voted for a substitute nominee or nominees 
designated by the Board of Directors, or will be voted to fix the number of 
directors at fewer than eight and for fewer than eight nominees, as the 
Board may deem advisable in its discretion.

Election of directors is by a plurality of the votes cast.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.


  10


                           AUDIT COMMITTEE REPORT

The Audit Committee of the Board of Directors of Union Bankshares, Inc. 
(the "Company") operates under a written charter adopted by the Board. In 
accordance with its charter, the Audit Committee assists the Board of 
Directors in fulfilling its responsibilities for overseeing the quality and 
integrity of the accounting, auditing and financial reporting practices of 
the Company and its systems of internal controls. 

The Audit Committee consists of Mr. Rollins (Chair), Mr. Marron and Mr. 
Hovey, II. The Board of Directors has determined that Mr. Marron is an 
audit committee financial expert as defined by the SEC and that all members 
of the Audit Committee are independent within the meaning of AMEX listing 
standards and SEC regulations. 

Management is responsible for the Company's internal controls and the 
financial reporting process, including preparing the Company's financial 
statements. The independent auditors are responsible for auditing those 
financial statements in accordance with the standards of the Public Company 
Accounting Oversight Board (United States) and to issue an opinion thereon. 
The Committee's responsibility is to monitor and oversee these processes. 
In that regard, the Audit Committee has discussed with the Company's 
internal and independent auditors the overall scope and plans for their 
respective audits and has met with the internal and independent auditors, 
with and without management present, to discuss the results of their 
examinations and evaluations of the Company's internal controls and the 
overall quality of the Company's financial reporting. In 2004, the Audit 
Committee met fourteen times.

The Audit Committee has reviewed and discussed the Company's December 31, 
2004 audited consolidated financial statements with management and with the 
Company's independent auditors. Specifically, the Committee has discussed 
with the independent auditors the matters required to be discussed by 
Statement on Auditing Standards ("SAS") No. 61 "Communications with Audit 
Committees", as amended. The Audit Committee has received the written 
disclosures and the letter from the independent auditors required by 
Independence Standards Board Standard No. 1 (Independence Discussions with 
Audit Committees), and has discussed with the independent auditors their 
independence. The Committee has considered and determined that the 
performance of non-audit services for the Company by the Company's external 
auditors, UHY, LLP, is compatible with maintaining that firm's independence 
in connection with serving as the Company's independent public accountants. 
A description of the fees billed to the Company for the services of the 
independent auditors relating to 2004 is included in the proxy statement 
under the caption "INDEPENDENT AUDITORS."

In reliance on the reviews and discussions referred to above, the Audit 
Committee recommended to the Board of Directors, and the Board has 
approved, that the audited consolidated financial statements be included in 
the Company's Annual Report on Form 10-K for the year ended December 31, 
2004 for filing with the SEC. 

Submitted by the Union Bankshares Audit Committee

      Robert P. Rollins (Chair)
      Franklin G. Hovey, II
      Richard C. Marron


  11


                        COMPENSATION COMMITTEE REPORT

The Compensation Committee (the "Committee") of the Board of Directors of 
Union Bankshares, Inc. (the "Company") is made up of three non-employee 
directors, William Costa, Robert Rollins, and Richard Sargent (Chair). Each 
of the members of the Committee was determined by the Board to be 
independent within the meaning of applicable listing standards of the 
American Stock Exchange ("AMEX").

During 2004, the Company did not have any salaried employees at the holding 
company level, but the Company's executive officers received compensation 
in their capacity as employees of the Company's subsidiary, Union Bank. The 
Committee's recommendations on compensation of the executive officers were, 
therefore, implemented by the Board of Directors of Union Bank, rather than 
the Company. However, during 2004, the same individuals served as directors 
of the Company and Union Bank.

Mr. Gibbons served as President and CEO and a director of the Company and 
Union Bank throughout 2004.

Salary and performance reviews for executive officers are normally done on 
an annual basis in January of each year. The Committee and subsidiary bank 
Board attempt to structure compensation packages for the executive officers 
that will assist in attracting and retaining competent senior management 
and will provide appropriate rewards for both personal and bank 
performance. Short-term incentive programs and, at certain levels, stock-
based, long-term compensation, are also utilized as a means to increase 
senior management's focus on future growth in corporate earnings and 
shareholder value.

In determining appropriate executive salary and benefit compensation 
levels, the Committee and Union Bank Board reviewed and compared the 
performance level of Union Bank within its peer group utilizing data 
available from the FDIC, Alex Sheshunoff and Company, Bank Analysis Center, 
the accounting firm of Berry, Dunn, McNeil & Parker and other vendors. The 
Committee and Board also considered salary surveys prepared by other 
companies which specialize in compiling compensation and benefits packages 
for banks. In 2002, the committee hired Gallagher, Flynn & Company, PLC to 
examine the Company's overall compensation structure and to make 
recommendations to the Committee. In accordance with the recommendations of 
Gallagher, Flynn & Company, beginning in 2002 and continuing in 2004, the 
Committee has chosen to broaden somewhat the group of executive officers of 
the Company and/or Union Bank to whom incentive stock options are awarded. 
In 2004 the Committee granted incentive stock options to four executive 
officers of the Company and/or Union Bank (including the Company's three 
executive officers, Mr. Gibbons, Ms. Borck and Ms. Mongeon).

In January, 2004, President and CEO Gibbons met with the Board of Directors 
of Union Bank for his annual review and the Compensation Committee 
presented its recommendations to the full Board. At that time Mr. Gibbons' 
salary was increased from an annual rate of $186,103 to $193,547, 
representing an increase of approximately 4.0%. In July, Mr. Gibbons was 
awarded a discretionary cash bonus of .8% of the net income earned by Union 
Bank in the first six months of 2004 ($20,600). Payment of a mid-year 
discretionary bonus to the CEO based on subsidiary-level net income for the 
first six months of the fiscal year is consistent with the Bank's practice 
in prior years. Mr. Gibbons' 2004 mid-year bonus represents the same 
percentage of Union Bank's net income for the first six months of 2004 as 
his 2003 mid-year bonus represented of the combined net income of Union 
Bank and Citizens (merged into Union in May, 2003) for the first six months 
of 2003. This bonus has been paid only to Mr. Gibbons in light of his 
unique role as President and CEO of the Company and Union Bank. Mr. Gibbons 
also participates in the Union Bank-wide discretionary cash bonus program 
in which all


  12


employees receive a percentage of their salary as determined by Union 
Bank's Board of Directors. For 2004 this amounted to 3.5% of base salary 
paid in November to employees of Union Bank, including Mr. Gibbons and 
other senior executives. The Committee also awarded Mr. Gibbons an option 
under the Company's Incentive Stock Option Plan to purchase 2,000 shares of 
Company common stock at $26.60 a share, which was the per share market 
price of the Company's common stock on the date of the award (January 2, 
2004). The award represented approximately 61.5% of the total 3,250 shares 
optioned under the Plan in 2004 to four executive officers of the Company 
and/or Union Bank.

In determining Mr. Gibbons' 2004 salary level, the Board of Directors of 
Union Bank and the Committee considered the Bank's financial performance 
for 2003. Return on average equity of 16.08%, return on average assets of 
1.76% (85th percentile in national peer group), and an efficiency ratio of 
58.18% were attained. The ratios were considered favorable levels 
considering the state of the economy and consistent with prior years. In 
evaluating Mr. Gibbons' overall compensation, the Committee and Union Bank 
Board also considered the fees he received for serving as director of the 
Company ($6,432) as well as the use of a bank-owned automobile.

Consistent with the approach taken in compensating Mr. Gibbons, it has been 
the policy of the Compensation Committee to establish salary and benefit 
levels for other executive officers, including Vice President Cynthia Borck 
and Treasurer and Chief Financial Officer Marsha Mongeon, in a manner 
designed to reflect the executive's individual performance and 
contributions to the overall profitability of the Company. It was the 
Committee's belief that the bonus awards to Ms. Borck and Ms. Mongeon were 
justified because they met and in many cases exceeded previously 
established performance goals. The Committee intends to continue that 
general approach. The Committee also intends to provide appropriate 
incentives for executives to contribute to achieving both the Company's 
short-term and long-term objectives, by structuring executive compensation 
to include an appropriate combination of short-term cash incentives and 
long-term stock-based (incentive stock option) compensation.

Submitted by Union Bankshares, Inc. Compensation Committee

      Richard C. Sargent (Chair) 
      William T. Costa, Jr.
      Robert P. Rollins

Pursuant to the rules and regulations of the SEC, neither the foregoing 
Audit Committee Report, the Compensation Committee Report nor the Stock 
Performance Graph below shall be deemed to be filed with the Commission for 
purposes of the Securities Exchange Act of 1934, nor shall any such 
material be deemed to be incorporated by reference in any past or future 
filing by the Company under the Securities Exchange Act of 1934 or the 
Securities Act of 1933, as amended.


  13


                           STOCK PERFORMANCE GRAPH

The following graph compares the cumulative total return (stock price 
appreciation plus reinvested dividends) on Union Bankshares, Inc.'s common 
stock since July 13, 2000 (the date upon which the Company's common stock 
became listed on AMEX) with (i) the cumulative total return on the stocks 
included in the NASDAQ Composite Index and (ii) the cumulative return on 
the stocks included in the SNL Financial (SNL) $250M-$500M Bank Asset-Size 
Index for the same time period. Earlier information is not presented, as 
there was not an organized trading market for the Company's common stock 
prior to July 13, 2000. All of these cumulative returns are computed 
assuming the investment of $100 on July 13, 2000 and the reinvestment of 
dividends at the frequency with which dividends were paid (quarterly) 
during the applicable years.

                           Union Bankshares, Inc.

                                   [GRAPH]




                                                         Period Ending
                              -------------------------------------------------------------------
Index                         7/13/00    12/31/00    12/31/01    12/31/02    12/31/03    12/31/04
-------------------------------------------------------------------------------------------------

                                                                        
Union Bankshares, Inc.        100.00      112.98      161.39      180.52      300.89      282.83
NASDAQ Composite              100.00       59.23       46.90       32.25       48.62       53.07
NASDAQ-Total US*              100.00       58.67       46.54       32.17       48.10       52.35
SNL $250M-$500M Bank Index    100.00      104.43      148.37      191.32      276.43      313.74


--------------------
*     Source: CRSP, Center for Research in Security Prices, Graduate School 
      of Business, The University of Chicago 2005. Used with permission. 
      All rights reserved. crsp.com



This year the stock performance graph reflects a change made by the Company 
in the NASDAQ comparison index from the NASDAQ-Total US Index to the 
NASDAQ-Composite Index. This change was made as the NASDAQ-Composite Index 
reflects a broader base of companies and is believed by management to be a 
more widely followed stock performance benchmark. For comparison purposes, 
the table immediately above shows in dollar terms the performance of both 
such NASDAQ indices over the specified performance period.

Source: SNL Financial LC, Charlottesville, VA


  14


                             EXECUTIVE OFFICERS

The following table sets forth certain information regarding the executive 
officers of the Company.




                          Position(s) with the Company and Subsidiary
Name and Age              and Occupation for the Past Five Years (1)
---------------------------------------------------------------------

                       
Kenneth D. Gibbons, 58    President, Chief Executive Officer and Director,
                          Union Bankshares, Inc. and Union Bank
                          Morrisville, VT

Cynthia D. Borck, 54      Vice President and Director, Union Bankshares, Inc. and
                          Executive Vice President and Director, Union Bank
                          Morrisville, VT

Marsha A. Mongeon, 49     Vice President, Treasurer and Chief Financial Officer,
                          Union Bankshares, Inc. and Senior Vice President and 
                          Treasurer, Union Bank
                          Morrisville, VT


--------------------
  The named officers also held the following positions with Citizens, 
      prior to its merger with Union Bank in May, 2003: Mr. Gibbons, 
      Director (1999-2003) and Interim President (February-May, 2003); Ms. 
      Borck, Director (1999-2003); and Ms. Mongeon, Assistant Treasurer 
      (2002-2003).




  15


                           EXECUTIVE COMPENSATION

Summary Compensation Table

The following table shows annual compensation for services rendered in all 
capacities to the Company and its subsidiaries during each of the preceding 
three years, paid to each executive officer of the Company whose total 
salary and bonus in 2004 exceeded $100,000: 

                         Summary Compensation Table




                                                                     Long Term
                                                                    Compensation
                                    Annual Compensation        ---------------------
Name and                        ---------------------------    Securities Underlying           All Other
Principal Position              Year     Salary      Bonus        Options/SARs (1)      Compensation (2)(3)(4)
--------------------------------------------------------------------------------------------------------------

                                                                                 
Kenneth D. Gibbons              2004    $193,547    $27,334          2,000 shs.                 $12,499
President, Chief Executive      2003     184,633     25,550          2,000 shs.                  14,072
Officer and Director of the     2002     167,004     22,923          3,000 shs.                  22,949
Company and Union Bank

Cynthia D. Borck                2004    $108,325    $ 6,771            750 shs.                 $11,009
Vice President and Director     2003      99,268      6,392            500 shs.                  14,470
of the Company and              2002      88,579      2,678            750 shs.                  20,681
Executive Vice President and
Director of Union Bank

Marsha A. Mongeon               2004    $102,905    $ 6,580            250 shs.                 $ 3,527
Vice President, Treasurer       2003      98,904      6,399            250 shs.                   3,453
and Chief Financial Officer     2002      94,837      2,777            375 shs.                   3,201
of the Company and Senior
Vice President and Treasurer
of Union Bank


--------------------
  All options shown in the table were granted under the Company's 1998 
      Incentive Stock Option Plan and (i) are subject to a one-year holding 
      period from the date of grant before they become exercisable; (ii) 
      expire five years from the date of grant; and (iii) were issued at an 
      exercise price equal to the fair market value of the Company's stock 
      on the date of grant. Grant date fair market value for options shown 
      in the table represents the closing price for the Company's common 
      stock as reported on AMEX on the date of the option grant (or, if 
      there were no trades on such date, on the next preceding date on 
      which a trade occurred). The information on stock option grants shown 
      in the table for 2002 has been retroactively adjusted to reflect the 
      3-for-2 stock split effective in August, 2003.
  Includes matching employer contributions under Union Bank's 401(k) 
      plan, as follows: Mr. Gibbons, 2004-$5,447; 2003-$6,170; and 2002-
      $5,010; Ms. Borck, 2004-$3,571; 2003-$3,140; and 2002-$2,742; and Ms. 
      Mongeon, 2004-$3,159; 2003-$3,123; and 2002-$2,893.
  Includes annual accruals under the Company's Deferred Compensation 
      Plan of an actuarially determined amount intended to replace the 
      reduction in benefits under the Union Bank Defined Benefit Pension 
      Plan resulting from salary deferrals, as follows: Mr. Gibbons, 2004-
      $362; Ms. Borck, 2004-$748; and Ms. Mongeon, 2004-$368; 2003-$330; 
      and 2002-$308.
  Mr. Gibbons' and Ms. Borck's totals include directors fees, as 
      follows: Union Bankshares - for each of Mr. Gibbons and Ms. Borck, 
      2004-$6,690; 2003-$6,432; and 2002-$6,184. Citizens - Mr. Gibbons, 
      2003-$1,470; and 2002-$11,755; Ms. Borck, 2003-$4,898; and 2002-
      $11,755. Mr. Gibbons also has use of a bank-owned automobile, which 
      is not reflected in the table.




  16


Neither the Company nor Union Bank has any employment or change in control 
agreement with any of the three executive officers named above or any other 
senior executive or key employee. 

Benefit Plans

Union Bankshares, Inc. Incentive Stock Option Plan. The Company's 1998 
Incentive Stock Option Plan, adopted by the Board and approved by the 
shareholders, is designed to link senior management compensation more 
closely to corporate performance and to increases in shareholder value, and 
to assist the Company in attracting, retaining and motivating executive 
management. The plan is administered by the Compensation Committee, which 
consists of three independent, non-employee directors. Eligibility for 
awards is limited to those senior officers and other key employees of the 
Company or its subsidiary who are in a position to contribute significantly 
to the Company's profitability and who are recommended to the Board of 
Directors by the Compensation Committee.

Awards under the plan consist of options to purchase shares of the 
Company's common stock at a fixed price, at least equal to 100% of the fair 
market value of the shares on the day the option is granted. The options 
may be exercised for a fixed period of time established by the Board at the 
time of the grant, but no longer than ten years from the date of option 
grant. The optionholder may pay for the option shares with either cash or 
other shares of the Company's common stock (valued at their fair market 
value), including shares withheld upon exercise of the option.

Options granted under the plan contain various provisions and limitations 
intended to qualify them as incentive stock options under federal income 
tax laws. Generally, the optionholder will not recognize gain at the time 
the option is granted or exercised, but only upon later sale of the shares 
received upon exercise. The total number of shares of the Company's common 
stock that could be awarded under the plan is 75,000, subject to standard 
adjustments in the case of stock dividends, stock splits, recapitalization 
and similar changes in the Company's capitalization. To date, options for 
the purchase of 23,050 shares have been granted under the plan, leaving 
51,950 shares available for future option grants.

The following table shows information about incentive stock options granted 
under the plan during 2004 to the three executive officers named in the 
summary compensation table:

                    Option/SAR Grants in Last Fiscal Year




                                                                                      Potential Realizable
                                                                                        Value at Assumed
                                                                                         Annual Rates of
                        Number of      % of Total                                          Stock Price
                       Securities     Options/SARs                                      Appreciation for
                       Underlying      Granted to        Per Share                       Option Term (3)
                      Options/SARs    Employees in      Exercise or     Expiration    --------------------
       Name            Granted (#)     Fiscal Year    Base Price (1)     Date (2)        5%          10%
----------------------------------------------------------------------------------------------------------

                                                                                 
Kenneth D. Gibbons        2,000           61.5%           $26.60          1/01/09     $14,698      $32,479
Cynthia D. Borck            750           23.1%           $26.60          1/01/09     $ 5,512      $12,180
Marsha A. Mongeon           250            7.7%           $26.60          1/01/09     $ 1,837      $ 4,060


--------------------
  Represents the closing price of the Company's common stock on the 
      date of grant (January 2, 2004) as reported on AMEX.

                   (footnotes continued on following page)


  17


  All options listed in the table (i) were granted on January 2, 2004; 
      (ii) were subject to a one year vesting period before they became 
      exercisable; (iii) expire five years after the date of grant; and 
      (iv) are subject to early termination following the optionholder's 
      termination of employment during the option period.
  Represents the hypothetical value that may be realized by the 
      optionholder (hypothetical market price less the exercise price) 
      assuming (i) a beginning per share market value of $26.60 for the 
      Company's common stock, (ii) the market price increases annually at 
      the stated rates and (iii) the option is held to its full term (5 
      years) before exercise.



                            --------------------

In assessing the grant date values in the above table, readers should keep 
in mind that no matter what theoretical value is placed on a stock option 
on the date of grant, its ultimate value will be dependent on the market 
value of the Company's stock at a future date and that value will in large 
part depend, in turn, on the efforts of the Company's management team.

The following table shows certain information about the exercise of 
incentive stock options in 2004 and the year-end values of outstanding 
options held by the executive officers named in the summary compensation 
table. 

            Aggregated Option/SAR Exercises in Last Fiscal Year,
                        and FY-End Option/SAR Values




                                                               Number of       Value of Unexercised
                        Number of                             Unexercised          In-the-Money
                         Shares                             Options/SARs at        Options/SARs
                       Underlying                              FY-End (2)            at FY-End
                      Options/SARs                            Exercisable/         Exercisable/
       Name             Exercised     Value Realized (1)     Unexercisable       Unexercisable (2)
---------------------------------------------------------------------------------------------------

                                                                         
Kenneth D. Gibbons        3,000             $30,300           8,000/2,000            $58,680/0
Cynthia D. Borck          1,000             $ 8,501             500/750                 $0/0
Marsha A. Mongeon           -0-             $     0             250/250                 $0/0


--------------------
  Represents the difference between the aggregate option exercise price 
      and the closing price of the Company's common stock on the date of 
      exercise as reported on AMEX.
  Year-end values are based on the closing price of the Company's 
      common stock on December 31, 2004 as reported on AMEX ($23.95 per 
      share), less the applicable option exercise price. Some of the 
      outstanding stock options were not in-the-money as of such date.



Union Bankshares, Inc. Deferred Compensation Plan. The Company has in 
effect a nonqualified deferred compensation plan for directors and 
executive officers under which participants are able to defer receipt of 
directors fees, salary or bonus. Participation in the plan is limited to 
current participants, which include one of the Company's current outside 
directors and the three executive officers named in the summary 
compensation table. Deferred compensation benefits are calculated based on 
the amount deferred, earnings on deferrals and the length of the deferral 
period. Payments are generally made in 15 annual installments beginning 
after age 55, or on a later date specified by the participant. Payment in a 
lump sum is possible in some circumstances. Amounts deferred and benefit 
accruals under the plan represent a general unsecured obligation of the 
Company, and no assets of the Company have been segregated to meet its 
obligations under the plan. However, the Company has purchased life 
insurance to fund substantially all of the benefit payments under the plan.


  18


The Board and management are evaluating the terms of this plan in light of 
recent changes to the tax laws governing deferred compensation 
arrangements, enacted as part of the federal American Jobs Creation Act of 
2004. It is expected that once the Internal Revenue Service issues rules 
implementing the Act, the Board will determine what measures are necessary 
for compliance, including possibly amending, freezing or terminating the 
plan retroactive to December 31, 2004.

Union Bank Defined Benefit Pension Plan. Union Bank maintains a non-
contributory defined benefit pension plan. All eligible employees of Union 
Bank join the plan upon completing at least 1,000 hours of service in a 
consecutive twelve-month period. An employee generally becomes 100% vested 
in the pension plan after 7 years. Benefits begin on retirement after age 
65, although early retirement may be taken after age 55, with an 
actuarially reduced benefit.

The following table shows estimated annual pension benefits payable to an 
employee of Union Bank under the pension plan upon retirement at age 65 in 
2005 under the most advantageous plan provisions available for various 
assumed levels of compensation and years of service. Benefit calculations 
are subject to the limitations under the Internal Revenue Code on the 
amount of the compensation that may be considered in such calculations 
($210,000 for 2005) and on the amount of the annual benefit payable under 
the plan ($170,000 for 2005). The amounts shown in this table (i) are 
calculated on the basis of a straight-life annuity and upon certain other 
assumptions regarding Social Security benefits and compensation trends, and 
(ii) assume that the individual retires at age 65 during 2005. Covered 
compensation for purposes of the benefit calculations includes salary and 
cash bonuses, but not other forms of compensation.




      Assumed Average
       3-year Annual
        Compensation                  Years of Service
      ------------------------------------------------------------
                            5          10         15         20
                         -----------------------------------------

                                              
          $ 15,000       $ 1,500    $ 3,000    $ 4,500    $  6,000
          $ 25,000       $ 2,500    $ 5,000    $ 7,500    $ 10,000
          $ 35,000       $ 3,500    $ 7,000    $10,500    $ 14,000
          $ 45,000       $ 4,500    $ 9,000    $13,500    $ 18,000
          $ 55,000       $ 5,704    $11,409    $17,114    $ 22,819
          $ 65,000       $ 7,029    $14,059    $21,089    $ 28,119
          $ 75,000       $ 8,354    $16,709    $25,064    $ 33,419
          $ 85,000       $ 9,679    $19,359    $29,039    $ 38,719
          $ 95,000       $11,004    $22,009    $33,014    $ 44,019
          $105,000       $12,329    $24,659    $36,989    $ 49,319
          $125,000       $14,979    $29,959    $44,939    $ 59,919
          $150,000       $18,292    $36,584    $54,877    $ 73,169
          $175,000       $21,604    $43,209    $64,814    $ 86,419
          $200,000       $24,917    $49,834    $74,752    $ 99,669
          $225,000       $25,579    $51,159    $76,739    $102,319
          $250,000       $25,579    $51,159    $76,739    $102,319


As of December 31, 2004, credited service under the Company's Defined 
Benefit Pension Plan for each of the executive officers named in the 
summary compensation table were as follows: Mr. Gibbons, 20 years (the 
maximum number of years of credited service); Ms. Borck, 17 years; and Ms. 
Mongeon, 15 years. 


  19


Union Bank 401(k) and Profit Sharing Plan. Union Bank maintains a 
contributory, tax-qualified Employee Savings (401(k)) Plan covering all 
employees who meet certain eligibility requirements. Participants may elect 
to contribute up to a specified percentage of eligible compensation to 
their 401(k) plan account on a tax deferred basis. The plan provides for 
matching contributions by Union Bank, in the sole discretion of the Bank's 
Board of Directors. During each of the years 2004, 2003 and 2002, Union 
Bank made a discretionary 401(k) matching contribution of fifty cents for 
every dollar of compensation deferred by a participant, up to 6% of each 
participant's eligible compensation. Discretionary matching contributions 
made for the account of the Company's three executive officers during the 
preceding three calendar years are shown in the summary compensation table 
and footnotes. Although the plan also contains a discretionary profit 
sharing component, to date Union Bank has not elected to make a profit 
sharing contribution under the plan.

Union Bank Discretionary Bonus Payments. Union Bank's Board of Directors 
has ordinarily paid to Mr. Gibbons each year, after the first two quarters 
of operations, a discretionary cash bonus based on Union Bank's net income 
for such period. This bonus was paid to Mr. Gibbons in each of the past 
three years. In January, 2004 and 2003, Ms. Borck and Ms. Mongeon received 
discretionary cash bonuses in amounts determined by the Board of Union 
Bank, upon recommendation of the Compensation Committee. In addition, Union 
Bank's Board has ordinarily paid a discretionary annual cash bonus to all 
employees each year (including Mr. Gibbons, Ms. Borck and Ms. Mongeon) 
equal to a percentage of base compensation. The applicable percentage for 
2002 staff bonuses was 3% and for 2003 and 2004 was 3.5%. All of these 
discretionary payments have been a matter of Board practice and are not 
embodied in any formal written plan. The Union Bank Board may, in its 
discretion and at any time, discontinue some or all of these bonus payment 
practices or modify them in any way, including changing the manner in which 
bonuses are calculated or time or manner of payment, and changing the 
persons or categories of persons to whom the bonuses are paid. 
Discretionary cash bonuses paid to the Company's three executive officers 
during the preceding three calendar years are shown in the summary 
compensation table. 

Other Employee Benefit Plans. Except as described in this proxy statement, 
neither the Company nor Union Bank maintains any special employee benefit 
plans or arrangements for their senior management. However, such 
individuals do participate in the Company's medical, dental, life, 
accidental death, disability, and salary continuation insurance plans, all 
of which are available to Union Bank's officers and employees generally.

                            INDEPENDENT AUDITORS

Change in Independent Auditor

In April, 2004, the Audit Committee engaged the independent registered 
public accounting firm of Urbach Kahn & Werlin LLP ("UKW") as the Company's 
external auditors for 2004. However, on June 1, 2004, the partners of UKW 
announced that they were joining the independent registered public 
accounting firm of UHY LLP ("UHY"), a newly-formed New York limited 
liability partnership, organized by the partners of four accounting firms 
with offices in seven (7) states. UHY is a legal entity that is separate 
from UKW. Following formation of UHY, UKW began the process of ceasing to 
provide audit services to public companies, and accordingly, on November 
17, 2004 it resigned as the Company's independent auditor. On that same 
date, the Audit Committee of the Company's Board of Directors approved the 
appointment of UHY as the Company's independent auditor for the year ended 
December 31, 2004 and the interim period prior to such year-end, to replace 
UKW. 


  20


Prior to the appointment of UHY, neither the Company nor anyone on its 
behalf had consulted with UHY during 2004 or the preceding two fiscal years 
regarding the application of accounting principles to any transaction, the 
type of audit opinion that might be rendered on the Company's financial 
statements, any matter that was the subject of a disagreement or any 
reportable event within the meaning of SEC rules. In addition, none of the 
reports of UKW on the Company's financial statements for 2003 or 2002 
contained an adverse opinion or disclaimer of opinion, or was qualified or 
modified as to uncertainty, audit scope or accounting principles. During 
the Company's two fiscal years and subsequent interim periods prior to 
their resignation, there were no disagreements between the Company and UKW 
on any matter of accounting principles or practices, financial statement 
disclosure, or auditing scope or procedure, nor any reportable events 
within the meaning of SEC rules. UKW has furnished to the Company a letter 
addressed to the SEC stating that it agrees with the statements in this 
paragraph.

In April, 2005, the Audit Committee selected UHY as the Company's 
independent auditor for 2005.

A representative of UHY will be present at the annual meeting and will be 
given the opportunity to make a statement if he so desires and will be 
available to respond to appropriate questions.

UHY has a continuing relationship with UHY Advisors NY, Inc. (formerly 
called Urbach Kahn & Werlin Advisors, Inc.) ("Advisors") from which it 
leases staff who are full time permanent employees of Advisors and through 
which the partners of UHY provide non-audit services. While serving as the 
Company's independent auditors, UKW maintained a similar continuing 
relationship with Advisors. The services referred to in the table below 
under "Tax" were provided to the Company by Advisors. As a result of their 
arrangement with Advisors, UKW and UHY have no full time employees and, 
therefore, all of the services referred to in the table below performed by 
UKW or UHY under "Audit" and "Audit Related" were performed for the Company 
by UKW or UHY, as the case may be, through permanent, full time employees 
of Advisors leased to UKW or UHY. UKW managed and supervised its audit 
engagements and the audit staff and is exclusively responsible for the 
reports rendered in connection with its audit of the Company's 2002 and 
2003 consolidated financial statements. Similarly, UHY manages and 
supervises its audit engagement and the audit staff and is exclusively 
responsible for the report rendered in connection with its audit of the 
Company's 2004 consolidated financial statements.

Audit Fees

Aggregate fees billed for professional services rendered to the Company by 
(1) UKW and/or Advisors for the years ended December 31, 2004 and 2003 and 
(2) UHY and/or Advisors for the year ended December 31, 2004, were as 
follows:




      Services Provided        2004            2004            2003
      -----------------------------------------------------------------
                           UHY/Advisors    UKW/Advisors    UKW/Advisors

                                                     
      Audit                   $57,696         $8,955          $54,000
      Audit Related             7,500              0           18,685
      Tax                       8,560              0            8,560
      All Other                     0              0                0
                              ---------------------------------------
      Total                   $73,756         $8,955          $81,245



  21


The Audit fees for 2004 and 2003 were for the audits of the annual 
consolidated financial statements of the Company included in the Company's 
annual report on Form 10-K and review of quarterly financial statements 
included in the Company's quarterly reports on Form 10-Q, filed with the 
SEC.

The Audit Related fees for 2004 and 2003 were for assurance and related 
services relating to Union Bank's trust operations. Audit related fees for 
2003 also include fees paid for assistance related to the merger of the 
Company's subsidiary banks, assistance relating to implementation of 
various provisions of the Sarbanes-Oxley Act of 2002 and assistance in 
connection with the 3-for-2 stock split in August, 2003.

Tax fees for 2004 and 2003 were for services related to tax compliance, 
including the preparation of tax returns, review of estimates, consulting 
and tax planning and tax advice.

Audit Committee Pre-Approval Guidelines

All 2004 and 2003 audit and non-audit services provided by UKW, UHY or 
Advisors, as the case may be, were approved by the Audit Committee. The 
Audit Committee has adopted Pre-Approval Guidelines relating to the 
provision of audit and non-audit services by the Company's external 
auditors. Under these Guidelines, the Audit Committee pre-approves both the 
type of services to be provided by the external auditor and the estimated 
fees related to these services. During the approval process, the Audit 
Committee considers the impact of the types of services and the related 
fees on the independence of the auditor. The services and fees must be 
compatible with the maintenance of the auditor's independence, including 
compliance with SEC rules and regulations.

In order to ensure timely review and approval, the Committee has delegated 
to the Chair of the Committee the authority to amend or modify the list of 
pre-approved services and fees, subject to prompt reporting to the full 
Committee of action taken pursuant to such delegated authority.

                            SHAREHOLDER PROPOSALS

Under SEC rules, management of the Company will be permitted to use its 
discretionary authority conferred in the proxy card for the annual meeting 
to vote on a shareholder proposal even if the proposal has not been 
discussed in the Company's proxy statement, unless the shareholder-
proponent has given timely notice to the Company of his or her intention to 
present the proposal at the meeting. In order to be considered timely for 
consideration at the 2006 annual meeting, the shareholder-proponent must 
have furnished written notice to the Company of the proposal no later than 
March 5, 2006. If a shareholder seeks to have his or her proposal included 
in the Company's proxy materials for the annual meeting, the notification 
deadline is earlier than noted in the preceding paragraph. In order to be 
eligible for inclusion in the Company's proxy material for the 2006 annual 
meeting, shareholder proposals must be submitted in writing to the 
Secretary of the Company no later than December 20, 2005 and must comply in 
all respects with applicable SEC rules relating to such inclusion. Any such 
proposal will be omitted from or included in the proxy material at the 
discretion of the Board of Directors, subject to such SEC rules.


  22


                                OTHER MATTERS

As of the date of this proxy statement, management knows of no business 
expected to be presented for action at the annual meeting, except as set 
forth above. If, however, any other business should properly come before 
the meeting, the persons named in the enclosed proxy form will vote in 
accordance with the recommendations of management.

Union Bankshares, Inc.
Morrisville, Vermont


  23


                             PLEASE DETACH HERE

                                    PROXY
                           UNION BANKSHARES, INC.
                       ANNUAL MEETING OF SHAREHOLDERS
                                MAY 18, 2005

The undersigned hereby appoints JoAnn A. Tallman and Marsha A. Mongeon, and 
each of them individually, as his or her lawful agents and proxies with full 
power of substitution in each, to vote all of the common stock of Union 
Bankshares, Inc. that the undersigned is (are) entitled to vote at the Annual 
Meeting of the Shareholders to be held at the offices of Union Bank, 20 Lower 
Main Street, Morrisville, Vermont on Wednesday, May 18, 2005, at 3:00 p.m., 
local time, and at any adjournment thereof. 

1.    TO FIX THE NUMBER OF DIRECTORS AT EIGHT (OR SUCH LESSER NUMBER AS 
      CIRCUMSTANCES MAY WARRANT) FOR THE ENSUING YEAR AND TO ELECT THE 
      NOMINEES LISTED BELOW.
         [ ]  FOR ALL NOMINEES               [ ]  WITHHOLD AUTHORITY
              (Except as noted below)             AS TO ALL NOMINEES

      INSTRUCTION: To withhold authority to vote for any individual nominee 
while voting in favor of the others, strike a line through the nominee's 
name in the list below:

      Cynthia D. Borck         Franklin G. Hovey, II     Richard C. Sargent
      Steven J. Bourgeois      Richard C. Marron         John H. Steel
      Kenneth D. Gibbons       Robert P. Rollins

               (All terms expire at the next annual meeting.)

In their discretion, the persons named as Proxies are authorized to vote 
upon such other business as may properly come before the meeting. If any 
such business is presented, it is the intention of the proxies to vote the 
shares represented hereby in accordance with the recommendations of management.

                 (continued, and to be signed on other side)


  


                             PLEASE DETACH HERE

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND MAY BE REVOKED AT ANY 
TIME BEFORE IT IS EXERCISED. THE BOARD RECOMMENDS A VOTE "FOR" ARTICLE 1. 
SHARES WILL BE VOTED AS SPECIFIED. IF THE PROXY IS SIGNED AND DATED, BUT NO 
VOTING SPECIFICATION IS MADE, THE SHARES REPRESENTED BY THIS PROXY WILL BE 
VOTED IN FAVOR OF ARTICLE 1.

PLEASE COMPLETE, DATE AND SIGN THIS PROXY CARD IN THE SPACE PROVIDED AND 
RETURN IT IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU EXPECT TO ATTEND THE 
MEETING IN PERSON.

_____ I/we plan to attend in person.         Dated:________________, 2004
      (Number of persons attending: _____)   Please sign exactly as your
_____ I/we do not plan to attend in person.  name(s) appear(s) on this proxy
                                             card. If shares are held jointly,
                                             both holders should sign. When 
                                             signing as attorney, executor, 
                                             administrator, trustee, guardian, 
                                             or representative capacity, 
                                             please give full title as such. 
                                             If a corporation, please sign in 
                                             full corporate name by president 
                                             or other authorized officer. If a 
                                             partnership or entity, please 
                                             sign in partnership or entity 
                                             name by authorized person.

                                             ______________________________
                                             Signature

                                             ______________________________
                                             Signature if held jointly