Changing Beneficiaries After Divorce in Vermont

Vermont's Automatic Revocation Has a Massive Blind Spot

Under 14 V.S.A. § 320, Vermont law automatically revokes any gifts or appointments to an ex-spouse in a will once the divorce is final. That includes executor nominations, trustee designations, and bequests. The statute treats your ex as if they predeceased you.

Sounds comprehensive. It isn't.

Section 320 applies only to probate assets — things distributed through your will. It does not touch non-probate assets, which pass directly to the named beneficiary on the account, completely bypassing the will, the divorce decree, and the probate court.

The ERISA Preemption Problem

Employer-sponsored retirement plans — 401(k)s, 403(b)s, and group life insurance — are governed by federal ERISA law, not Vermont state law. Under ERISA, the plan administrator is legally required to pay the person named on the beneficiary designation form on file. Period.

If you die without updating your 401(k) beneficiary form, your ex-spouse receives the entire balance. It doesn't matter that your divorce decree says otherwise. It doesn't matter that your new will names your children. The plan administrator follows the form, and federal law backs them up.

This isn't a theoretical risk. The U.S. Supreme Court affirmed this exact outcome in Egelhoff v. Egelhoff — the plan pays whoever is on the form.

What You Must Update Manually

These accounts are NOT protected by Vermont's automatic revocation statute. Each one requires a new beneficiary designation form submitted directly to the institution:

Employer-sponsored accounts (ERISA-governed):

• 401(k) and 403(b) plans
• Group life insurance through your employer
• Corporate pension plans

Non-ERISA accounts:

• Individual life insurance policies
• Traditional and Roth IRAs
• Payable-on-death (POD) bank accounts
• Transfer-on-death (TOD) brokerage accounts
• Annuities

For each account, contact the custodian or administrator and request a new beneficiary designation form. Complete it, name your new beneficiary (children, a sibling, a trust), and keep a copy for your records.

Vermont State Pensions Have Their Own Rules

If you or your ex-spouse participates in VSERS, VSTRS, or VMERS, the beneficiary designations on those accounts are governed by state pension statutes, not ERISA. But the same principle applies: the pension system pays whoever is named on file. A divorce decree or updated will doesn't override the pension's beneficiary form.

Contact the Office of the State Treasurer to request updated beneficiary forms for any state pension accounts.

The Timing

Do this as soon as your divorce decree becomes absolute. There's no specific deadline, but every day you wait is a day your ex-spouse remains the named beneficiary on accounts that pass outside your will. If something happens to you in the interim, the payout goes to them regardless of your intentions.

Our Vermont After-Divorce Checklist includes a beneficiary audit worksheet that inventories every account requiring a manual update, with contact information for each type of institution.

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