Trust FAQs

1.  What is a trust?

A trust is a fiduciary relationship in which a trustor gives another party, known as the trustee, the right to hold title to property or assets for the benefit of a third party, such as a beneficiary. The trustee holds, manages, and protects the assets of the trust. A beneficiary is the person(s) or entity that will receive the assets at a future date.

Many people create trusts to protect assets, to avoid probate, or to create a legacy of charitable giving.

A testamentary trust is part of your last will and testament. No assets pass to the trust until after you pass away. An inter vivos trust is created while you are still alive, and assets are transferred during your lifetime. Types of inter vivos trusts include revocable, irrevocable, special needs trusts, and charitable trusts.

2. How do I create a trust?

An estate planning attorney or financial adviser can provide you with expert advice about whether a trust could be a useful component in your long-term financial plan.

3. How can I use a trust with my NYSTRS benefits?

If you have a testamentary or inter vivos trust, you have a few options with respect to your NYSTRS benefits:

a. Name a trust as an option beneficiary:

You may name an inter vivos or testamentary trust as your retirement option beneficiary for any lump sum or contingent guarantee options. You may not name a trust as the beneficiary for any survivor or pop-up survivor options, or as a primary beneficiary of a guarantee option.

When completing a retirement application or updating your retirement option beneficiary, please put the name and address of the trustee in the name and address sections, include the date of the trust as the date of birth, select “other” for relationship, and include the words "Trustee of the [name of trust]." You will need to provide the System with a certification of trust or copy of the trust. 

Please note that if you name a testamentary trust as the option beneficiary, the testamentary trust must be part of your last will and testament, not someone else's. If you are designating an inter vivos trust, you do not need to be the grantor of the trust.

With this type of designation, the trust is the beneficiary, not the individuals who will eventually receive the trust assets. If you revoke the trust or it terminates, you should update your option beneficiary designations as soon as possible to ensure benefits are paid according to your wishes. Similarly, if you revoke your last will and testament with a testamentary trust, you should also update your beneficiary designations as soon as possible.

Upon your death, the System will contact the trustee (or successor trustee) or executor directly to pay the option benefit. Payment will be made to the trust, not to the individual beneficiaries named in the trust. Your trustee will need to provide the required System forms, as well as an affidavit of trustee.

b. Name a trust as a beneficiary of an in-service or post-retirement (Paragraph 2) death benefit:

You may name an inter vivos or testamentary trust as a primary or contingent beneficiary for the in-service or post-retirement (Paragraph 2) death benefit.

When completing the Beneficiary Designation for In-Service or Post-Retirement (Paragraph 2) Death Benefit (NET-11) form, please put the name and address of the trustee in the name and address sections, include the date of the trust as the date of birth, select "other" for relationship, and include the words "Trustee of the [name of trust]." You will need to provide the System with a certification of trust or copy of the trust.

Please note that if you name a testamentary trust as the death benefit beneficiary, the testamentary trust must be part of your last will and testament, not someone else’s. If you are designating an inter vivos trust, you do not need to be the grantor of the trust.

With this type of designation, the trust is the beneficiary, not the individuals who will eventually receive the trust assets. If you revoke the trust or it expires, you should update your Paragraph 2 beneficiary designation as soon as possible to ensure benefits are paid according to your wishes. Similarly, if you revoke your last will and testament with a testamentary trust, you should also update your beneficiary designations as soon as possible.

Upon your death, the System will contact the trustee (or successor trustee) to complete the process to pay the death benefit. Payment will be made to the trust, not to the individual beneficiaries named in the trust. Your trustee will need to provide the required System forms, as well as an affidavit of trustee.

c. Deposit monthly retirement benefit into a Trust

You may directly deposit your monthly pension benefit into a bank account titled to an inter vivos trust.

Please see Instructions for Direct Deposit to Trust (LEG-2) for further information on how to deposit your monthly benefit to an inter vivos trust.

4. Can my Trustee obtain information about my NYSTRS benefit?

Without a specific written authorization, a trustee is not given authority to access benefit information at NYSTRS during your lifetime. A trustee will only be contacted upon your death, provided the trust is a beneficiary of a retirement option or death benefit.

To allow a third party to access your information at NYSTRS, you must provide a written and signed authorization. A written authorization will allow the third party to access information about your account for a period of up to one year. This authorization can limit the information accessible by the third party, and no transactions may be performed.

To allow a third party the ability to access information and conduct transactions on your behalf, you must provide the System with a properly executed Power of Attorney. For further information about Powers of Attorney, see our Power of Attorney FAQs.

5. How is designating a trust as beneficiary different from a UTMA designation?

A beneficiary designation under the Uniform Transfer to Minors Act ("UTMA") designates a custodian to manage the property of a minor until the minor reaches the age of majority, in accordance with NYS law. When the minor reaches the age of majority, the custodial designation will lapse and the benefit will be paid to the minor directly.

A trust, by comparison, may contain additional provisions restricting an individual’s access to the funds or extending the age the minor receives access to the trust assets. A trust designation remains in effect until you execute a new beneficiary designation, or if the trust is terminated or revoked. It does not lapse automatically upon the occurrence of a certain date.

You should consult with an attorney to determine which type of beneficiary designation is right for you.

6. What is a Certification of Trust or an Affidavit of Trustee?

A certification of trust is a document used to certify that a trust was established. It is also referred to as a memorandum of trust or an affidavit of trustee. It provides important information, such as the name of the trust, the trustees, and the date the trust was formed.

Many attorneys will provide a certification of trust when the trust documents are drafted. The certification of trust drafted by your attorney is acceptable for NYSTRS beneficiary designations. For your convenience, NYSTRS also provides a Certification of Trust (LEG-1), that can also be used when completing a beneficiary designation. Please note that an attorney drafted certification of trust is not acceptable for a direct deposit to trust and NYSTRS requires a Certification of Trust for Direct Deposit (LEG-2) in these cases. 

An affidavit of trustee provides similar information to a certification of trust but will also confirm that the trustee has authority to act for the trust, and that the trust is still in existence (it has not been revoked or terminated). NYSTRS will request that your trustee execute an affidavit of trustee before any death or retirement option benefits can be paid to your trust.

7. Can I designate a bank account titled to my trust to receive my monthly pension benefit?

Education Law §524 provides that a member’s benefit is unassignable. However, you may deposit your monthly pension benefit into a bank account titled to a trust provided the trust meets all of the following requirements:

• The trust must be (1) revocable; or (2) irrevocable and solely for the member’s benefit.
• The Tax Identification Number for the trust and bank account must be the member’s Social Security number (for purposes of Internal Revenue Service reporting). Please note that even if the trust is a joint trust, the member’s Social Security number must be used for both the trust and bank account listed on the Direct Deposit Authorization Agreement (GRE-54). The Tax ID for the trust and bank account must include the member’s Social Security number and may not be solely the spouse’s Social Security number.

8. What documents do I need to submit to deposit my monthly benefit into a bank account titled to my trust?

You must submit the following documents in order to have your monthly benefit directly deposited to a bank account titled to your trust.

1. Direct Deposit Authorization Agreement (GRE-54), signed by the member.
2. Certification of Trust for Direct Deposit (LEG-2), signed by the current trustee.
3. A complete copy of your trust.

Please note that your direct deposit to a bank account titled to a trust will not be approved unless all of these documents are received by the System. Upon receipt of these documents, the System will review your request and contact you if your direct deposit request cannot be honored.

9. Will applying to deposit my monthly benefit into a bank account titled to my trust delay my direct deposit?

While the System works to process all direct deposit requests quickly, if you are a new retiree and have not already designated another bank account for your direct deposit, choosing to deposit your monthly benefit into a bank account titled to a trust may delay your initial deposit, depending upon the timing of your request. Accordingly, upon retirement, you may wish to designate your personal bank account as your direct deposit account and then submit a change request, so as not to delay receipt of your initial payment.

If you currently have your payment being deposited to your personal bank account, we will continue to make your deposit into the account on file. Please do not close your personal bank account until you have received confirmation from the System that the direct deposit change has been approved and processed.

10. Once I designate a trust to receive my monthly pension payments, can I change my direct deposit?

Although a bank account titled to a trust is receiving your monthly benefit, you remain the owner and in control of your monthly pension benefit. You can change where it is being deposited at any time by filling out a new Direct Deposit Authorization Agreement (GRE-54).

Disclaimer: This FAQ sheet was drafted by NYSTRS in order to help members understand pension issues surrounding trusts. Every effort has been made to ensure the accuracy of the information offered. However, you should not rely solely on the information contained herein. In the event of any discrepancy between the information contained in this FAQ and state and federal law, the state and federal law will govern. NYSTRS staff is unable to address specific legal questions. If you have legal questions about your trust or executing one, please consult an attorney.