Tag Archives: estate

NYSLRS Basics: Special Beneficiary Designations

As a NYSLRS member, it’s important for you to name a beneficiary. Upon your death, your beneficiaries may be eligible to receive a death benefit. You may designate any person, a trust or organization to receive your ordinary death benefit – it does not have to be a family member.

The two main types of beneficiaries are primary (an individual or individuals who receive your benefit if you pass) and contingent (an individual or individuals who receive your benefit if your primary beneficiaries predecease you.)

Primary and Contingent Beneficiaries

A primary beneficiary is the person who receives your death benefit. If you name more than one primary beneficiary, each will share the benefit equally, unless you indicate specific percentages totaling 100 percent are to be paid (e.g., John Doe, 50 percent, Jane Doe, 25 percent, and Mary Doe, 25 percent).

A contingent beneficiary will receive your death benefit only if all the primary beneficiaries die before you. Multiple contingent beneficiaries will share the benefit equally, unless you indicate specific percentages are to be paid.

Special Beneficiary Designations

Special Beneficiary Designations

There are special rules for certain beneficiary designations:

Minor Children

If your beneficiary is under age 18 at the time of your death, your benefit will be paid to the child’s court-appointed guardian. You may also choose a custodian to receive the benefit on the child’s behalf under the Uniform Transfers to Minors Act (UTMA). Before making this type of designation, please contact us for more information.

Trust

If you have executed a trust agreement or provided for a trust in your will, your trust can be your primary or contingent beneficiary. Use our Trust with Contingent Beneficiaries form (RS5127-T) and be sure to include the trustee’s address.

With this type of designation, the trust is the beneficiary, not the individuals who will receive the trust. If you revoke the trust or it expires, its designation as beneficiary is no longer valid. You would then need to complete a new Designation of Beneficiary form (RS5127) to keep your beneficiary designation current.

You should contact your attorney for more information on trust agreements.

Estate

You may name your estate as the primary or contingent beneficiary of your death benefit. If you name your estate as your primary beneficiary, you cannot name a contingent. If a benefit is payable, it will be given to the executor of your estate to be distributed according to the terms of your will.

Entities

You may name any charitable, civic, religious, educational or health-related organization as your beneficiary. An entity can be a primary or contingent beneficiary.

You can find your NYSLRS beneficiaries listed in your Member Annual Statement, which is sent out every summer. Starting in January, you’ll be able to view and update your beneficiaries using our secure self-service portal, Retirement Online. Watch for more information about opening your new online account in upcoming blog topics and in other NYSLRS communications.

Choosing a Beneficiary

Here’s what to consider.

Designating a beneficiary is a choice you must make and revisit throughout your career. This decision requires some careful thought. If you die while working, the beneficiaries you choose may receive certain benefits. If you want to make a beneficiary change, make sure you’re aware of who can be named as your beneficiary.

Types of Beneficiaries

Choosing a beneficiary There are two types of beneficiaries you can name: primary and contingent. A primary beneficiary receives your death benefit. You have the option to name more than one primary beneficiary. If you chose to do this, each primary would share the benefit equally.

Example:

If you listed your spouse and child as primary beneficiaries, your family would receive:

  • Spouse: 50 percent of benefit
  • Child: 50 percent of benefit

But you can also state specific percentages of how you’d want the benefit paid out to primary beneficiaries. Just keep in mind that the percentages must add up to 100 percent. (This applies to contingent beneficiaries also.)

A contingent beneficiary only receives a benefit if all your primaries die before you. You can have primary and contingent beneficiaries, but a contingent may only get a benefit if there are no primaries to choose from. If you outlive your primary and contingent beneficiaries and haven’t named anyone new, your benefit will go to your estate.

Special Beneficiary Designations

Your beneficiary doesn’t have to be a person – you could also name your estate, trust, or an organization to receive your benefit.

  • Estate. The executor of your estate will receive your benefit to be distributed according to your will. You can make your estate a primary or contingent beneficiary, but if you name it your primary, you can’t name a contingent.
  • Trust. If you name your trust as a beneficiary, keep in mind that the trust is the beneficiary, not the individual you established the trust for. If you cancel the trust or it expires, it won’t be a valid beneficiary anymore. (You may also want to speak with your attorney if you’re thinking about making your trust a beneficiary.)
  • Organizations. You can name any charitable, civic, religious, educational or health-related entity as a beneficiary. Please provide the organization’s full name and address if you name them a beneficiary.

You can read more about beneficiaries in our publication, Life Changes: Why Should I Designate a Beneficiary?