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“Pessimism is as American as apple pie — frozen apple pie with a slice of processed cheese.” George Will, Pulitzer Prize winning Journalist, (b) 1941.

Every year about this time our grandchildren and their parents, a.k.a our kids, visit Marco. The family continues to grow and this year grandchild number 3 will be making his maiden voyage to see PaPa and YaYa.

Besides being crazy about these kids, big and small, I share this as an important reminder to maintain a long-term outlook, remain committed to health, happiness and prosperity rather than succumb to the short-term pessimism associated with today’s financial markets.

Pessimists are willing to sell things for much lower prices than optimists, and likewise, when people are extremely optimistic they’re willing to buy things for much higher prices. Simple stuff. This is one reason we’re in our current situation.

Reality is always somewhere in the middle. Realists try to evaluate (see the word value in there?) based on merit and facts. This has been very difficult in this environment, but don’t forget that we’ve navigated rough seas before. Ultimately, the U.S. economy will recover and the rest of the developed world is likely to slow. It will take some time for the current situation to play itself out.

A little history lesson helps to clarify. The first leveraged buyout was in the 1980s tanked in 1987. After that “crash” there were rumblings of a depression, not just recession. Even Donald Trump had troubles in the 90s with commercial real estate. We survived the S&L crisis and the bankruptcy of the Bank of New England, among others. In 1998 Russian bond market defaults triggered emerging market debt problems. The advent of the internet and “dot-coms” led to new found fortunes, venture capital, IPO’s, speculation and loans to companies that became worthless; popping the NASDAQ bubble. We’ve experienced September 11, WorldCom, and Enron. Yet we’re still standing.

Pretty grim stuff, but the world keeps turning and as a favorite client of mine says, “we’ll live to see another day”. With the future in mind, let’s continue from last week and examine the importance in naming IRA beneficiaries.

At some point your surviving spouse, children and others will inherit your Individual Retirement Accounts (IRAs), yet you’d like to control the distribution of those assets after you’re gone.

Maybe your heir isn’t interested in managing investments, has potential creditor problems, or is simply not capable of doing so because of emotional turmoil, family conflict or disability. Naming a trust as beneficiary of your retirement accounts may be the solution allowing you to relax today and enjoy the contentment from knowing your loved ones are provided for exactly as you wish.

First, determine whether naming a trust makes sense for you. This example may help.

Meet Mike and Jennifer. Mike and Jennifer have two children. Mike has substantial IRA accounts. Mike handles the family investments. Mike and Jennifer both believe the children aren’t ready to or aren’t capable of “minding the store” after both Mike and Jennifer have passed away.

Mike can name a trust as a beneficiary of his retirement accounts. This will ensure that the investments are professionally managed and relieve Jennifer of this responsibility. Naming a trust as beneficiary provides Jennifer with professional and objective help if the children request money. It also ensures that, following both Mike and Jennifer’s passing, a capable party will be responsible for keeping track of and managing the investments, paying the children’s bills, handling tax matters and attending to every little detail required by the trust.

Once you decide to name a trust, the trust itself must be properly planned. To qualify as a beneficiary, your trust must meet four very specific criteria. If each of these criteria is met, it is a “qualified” trust and the retirement account administrator can “look through” the trust to “see” the trust beneficiaries as the direct beneficiaries of the retirement account.

While any trust may be a retirement account beneficiary, only a qualified trust may take full advantage of the stretch permitted by the required minimum distribution rules. A qualified trust may stretch distributions out over the single life expectancy of the trust beneficiary, or the age of the eldest beneficiary in the case of multiple beneficiaries.

When a qualified trust is the retirement account beneficiary, it receives the retirement account distributions and then passes them on to the trust beneficiaries. In most qualified trusts, the trustee isn’t required to pass on any more than the required minimum distribution, thus the heirs are prevented from rapidly depleting the retirement account. Generally, estate planners use a revocable living trust that becomes irrevocable upon the owner’s death as the retirement account beneficiary. Other types of trust may be used and may be more appropriate in certain situations.

Dealing with trusts requires careful planning. Naming a trust as an IRA beneficiary can be an effective financial and estate planning strategy if permitted by your IRA document. But like all other strategies, it must be carefully considered and implemented. It’s important to seek advice about the options available under your IRA document from your financial advisor or estate-planning attorney before naming a trust as your retirement account beneficiary.

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Darcie Guerin is a financial adviser and branch manager at Raymond James & Associates Inc. at 606 Bald Eagle Drive, suite 401, Marco Island. Contact her at Darcie.Guerin@raymondjames.com, 389-1041 or toll-free (866) 343-0882.