a. Upon the death of a contributor before retirement there shall be paid to his or her estate or to such person as he or she shall have nominated by written designation duly executed and filed with the retirement board:
1. His or her accumulated deductions; and, in addition thereto,
2. A sum consisting of:
(i) His or her reserve-for-increased-take-home-pay, if any, which shall be paid out of the contingent reserve fund; and
(ii) An amount, payable out of the contingent reserve fund in the case of a new entrant and out of pension reserve fund number two in the case of a present-teacher, equal to the salary earnable by him or her during the six months immediately preceding his or her death, provided that at the time of his or her death he or she had obtained the age of sixty-five years or had a total-service of thirty-five years and was eligible for service retirement.
b. Where any contributor, by any designation heretofore or hereafter filed pursuant to subdivision a of this section and in effect at the time of the death of such contributor, nominated or shall nominate any person to receive the amount payable under subparagraph (ii) of paragraph two of subdivision a of this section, the reserve-for-increased-take-home-pay, if any, of such member, payable under subparagraph (i) of such paragraph two shall be paid to the person so nominated.
c. (1) The retirement board may adopt rules and regulations providing that in any case where a contributor or designated beneficiary authorized by the applicable provisions of this chapter to nominate a beneficiary to receive a lump sum benefit pursuant to section 13-542 or section 13-543 of this chapter represents to the retirement system that a specified person has been designated by such contributor or designated beneficiary as a trustee of an inter vivos or testamentary trust for the purposes of this subdivision c, such person shall be eligible to be nominated to receive, in the capacity of trustee, such lump sum benefit pursuant to the applicable provisions of either of such sections.
(2) Any proceeds received by a trustee under this section shall not be subject to the debts of the member or to transfer or estate taxes to any greater extent than if such proceeds were payable to the beneficiaries named in the trust and not to the estate of the member.
(3) A payment made in good faith under this section (a) to a person so represented to the retirement system to be a trustee of an inter vivos trust, or (b) to a person who is designated as a successor trustee of an inter vivos trust and who provides a copy of his or her appointment or, (c) to a person who is designated as a trustee or successor trustee of a testamentary trust and who provides a copy of the letters of trusteeship, provided such payment is made to such payee in the capacity of trustee, shall be a complete discharge to the retirement system to the extent of the payment. Such discharge shall not be impaired or affected by an adjudication that a trust is invalid or that a person represented to be or designated as a trustee is not entitled to receive the proceeds, if payment is made in good faith under this section before notice to the retirement system of the claim of invalidity or lack of entitlement on which such adjudication is based.
(4) (a) If no person to whom the retirement system is authorized to make payment in the capacity of trustee, as provided for in paragraph three of this subdivision c, claims the proceeds within eighteen months after the death of the member, payment shall be made to the deceased member's estate and such payment shall be a complete discharge to the retirement system to the extent of the payment.
(b) If satisfactory evidence is furnished within such period of eighteen months that there is or will be no trustee to receive the proceeds, payment shall be made to the deceased member's estate.
(5) In the event that after a person represented to have been designated as a trustee of an inter vivos or testamentary trust is nominated pursuant to rules and regulations adopted under paragraph one of this subdivision c, the contributor or designated beneficiary authorized to make a nomination shall, in compliance with the applicable provisions of this chapter, nominate for receipt of the same lump sum benefit:
(a) a beneficiary other than a person so represented to have been designated as a trustee; or
(b) a person represented to have been designated as a trustee under a different inter vivos or testamentary trust; a payment made in good faith under this section to the last such nominee as of the date of death, whether he or she is a beneficiary not represented to have been designated as trustee or a person represented to have been so designated, shall be a complete discharge to the retirement system to the extent of the payment, provided, however, that if payment is made to a person represented to have been designated as a trustee, the retirement system shall be so discharged if payment is made to such person in the capacity of trustee and if there is compliance with the requirements of paragraph three of this subdivision c with respect to submission of copies. In any case where the last such nominee is a person represented to have been designated as a trustee, the provisions of paragraph four of this subdivision c shall apply.