Estate Planning

Your TRS pension and TDA don’t follow your will — they follow the beneficiary forms you file with TRS. Keeping those current is the single most important part of your estate plan.

A complete plan pairs those designations with a few key documents and, for some people, a trust. This page explains the pieces in plain terms. For anything specific to your situation, work with an estate attorney.

Beneficiary designations come first

Beneficiary designations control who receives your TRS pension death benefit and your TDA balance. Because of that, they usually matter more than your will for these accounts.

• Update them in your MyTRS online account, or by filing the paper beneficiary designation form with TRS.
• You can name multiple primary and contingent beneficiaries for your TDA and set a percentage split for each.
• You can usually name a non-spouse beneficiary — a child, sibling, or friend — though some survivor options cost more depending on who you name.
• Naming a trust is possible in some cases, but it has tax and administrative implications — ask an estate attorney first.

Keep your designations up to date

Outdated beneficiary forms are one of the most common estate-planning mistakes. Nothing updates automatically — you have to make the change yourself.

• Divorce does not remove your ex-spouse. A divorce decree or QDRO may address it, but TRS designations generally stay in effect until you change them.
• Remarriage does not add a new spouse. You must update the form yourself.
• Review after any major life event — marriage, divorce, birth, or a beneficiary’s death — and every few years even without one.

Beneficiary vs. survivor option

These sound alike but work differently, and your pension isn’t guaranteed to continue to your spouse unless you elect it.

• A beneficiary typically gets a one-time death benefit or any remaining guaranteed payments.
• A survivor option (such as a joint-and-survivor annuity) is an ongoing monthly pension paid to a named person after your death — usually in exchange for a reduced benefit during your lifetime.
• Continuing income to your spouse is not automatic. You must actively elect a survivor option or designate a beneficiary; skipping this can leave your spouse without pension income.

What happens to your pension at death depends on whether you die before or after retirement and which option you elected — anything from a lump-sum death benefit to a continuing survivor pension.

What passes through probate — and what doesn’t

Benefits with a valid, living named beneficiary generally pass directly to that person, outside of probate. Probate mainly matters if there’s no valid beneficiary or your estate itself is named.

• A will directs assets through probate after death — and is still important for personal property, non-designated accounts, and naming guardians or executors.
• A trust can hold and manage assets during your life and distribute them on your terms, often avoiding probate.
• Pension and TDA benefits with valid designations generally bypass both and go straight to your named beneficiaries.

Whether a revocable living trust makes sense depends on your estate’s complexity and goals, like avoiding probate or managing assets for beneficiaries. An estate attorney can advise you.

Documents that protect you while you’re alive

Estate planning isn’t only about death. A couple of documents let someone you trust act for you if you can’t — put them in place well before you need them.

• Health care proxy: names someone to make medical decisions if you can’t. A good idea regardless of retirement status.
• Power of attorney: authorizes someone to manage your financial affairs, including pension and TDA matters, if you’re unable to.
• Durable power of attorney: stays effective even if you become incapacitated — planners often recommend it as a standard part of the plan.

Without a power of attorney or similar designation, your family may have to petition a court for guardianship to manage your finances — a lengthy and costly process.

Divorce, QDROs, and dividing a pension

New York courts can treat pension benefits earned during a marriage as marital property subject to division. A Qualified Domestic Relations Order (QDRO) — or, in New York’s public system, a similar domestic relations order — can legally direct part of your TRS pension to an ex-spouse. Courts often use a formula (like the Majauskas formula) to set the ex-spouse’s share of the pension attributable to the marriage.

Death benefits and life insurance

TRS provides a death benefit — the amount and structure vary by tier and by whether you’re active or retired — payable to your designated beneficiary, on top of any survivor option you elect.

• The in-service (active) death benefit is often larger, based on a salary-and-service formula.
• The post-retirement death benefit is typically smaller and may shrink over time or depend on the payment option you chose.
• Life insurance can supplement survivor income if you pick a pension option with little or no survivor benefit, or help cover estate costs — TRS death benefits generally aren’t a substitute for a full private policy.

New York estate tax

New York has its own estate tax, separate from the federal one, and it includes most of your assets — retirement accounts included — in your taxable estate. The exemption changes periodically and is indexed for inflation, and it’s generally lower than the federal exemption. That means a mid-sized estate that owes no federal estate tax could still owe New York estate tax. Check the current-year figure with a tax or estate professional.

Get the right help

Review and update your beneficiary designations and estate documents after any major life event — changing jobs, marrying, or having a child — not just before retirement. And consider working with an estate attorney who knows TRS, QDROs for public pensions, and NY-specific estate tax rules; a generalist can miss pitfalls specific to NYC public pensions.