See-Through Trust

When you get a regular trust...wet. A well-endowed trust can win contests this way.

Also, it's the name for a trust that has been named the beneficiary of an IRA.

An individual retirement account, or IRA, serves as a way to save for retirement. A person contributes funds over their working life, with the government giving tax breaks to help build up a nest egg. Then, when retirement comes, the person can start taking money out to pay for things like water aerobics lessons and tapioca pudding.

But what happens if someone is killed by a pack of ravenous wolves one day before they're set to start taking money out of their IRAs? That money has to go to someone.

Well, to prepare for the eventuality that a person dies before they drain their IRA, each account holder names a beneficiary. Typically, this beneficiary is a person. Maybe you can name a pet, but you should check with your lawyers on that one first.

In the case of a see-through trust, the beneficiary is a trust. This type of structure has far more restrictions than a typical trust, mostly because the law requires IRAs to have an end date. There are required minimum distributions that have to happen (and continue to happen until the account is liquidated). As such, the ultimate recipient of the funds need to have a life expectancy. Meaning...they can't be an immortal being (so you can't leave your IRA to a see-through trust that has Superman as its beneficiary), or a non-human entity, like a charity.