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HOW TO DECIDE IF A TRUST SHOULD BE PART OF YOUR PERSONAL FINANCIAL PLANNING

 HOW TO DECIDE IF A TRUST SHOULD BE PART
 OF YOUR PERSONAL FINANCIAL PLANNING
 NEW YORK, Sept. 22 /PRNewswire/ -- Rodney Woods, chief executive officer of Merrill Lynch Trust Company, says approaching the crucial question of whether to make a trust part of your financial plan can be handled rather easily.
 Mr. Woods, a leading financial planner and foremost expert on personal trusts, provides his advice on key points you should consider.
 -- Is your net worth greater than $600,000? Above that, the federal estate tax kicks in and a trust vehicle could help minimize the bite.
 Your net worth may be more than you think. Appreciation of your home, a pension settlement and/or a life insurance policy payout can shoot your net worth quickly beyond the $600,000 threshold. Besides, there's talk in Congress of cutting the tax-free amount to below $600,000. And the current $600,000 value of your net worth may be greatly diminished by inflation. It's the future purchasing power of your assets which is the critical number. So if you figure your demise is 25 years away, think of tax-free purchasing power of, say, $600,000 as nearer perhaps to $225,000. On top of that, estate taxes can be very rough. Although the first $600,000 of your estate is untaxed, the very next dollar is taxed at 37 percent, higher than the highest current federal income tax rate.
 -- Do you have a business that the family wants to continue to run? As your personal property, the business is subject to estate taxes after your death. These could be so high that the business might have to be sold or liquidated to satisfy them.
 One answer is to set up a life insurance trust which holds a policy on your life. The trust pays the premium. After your death, the payoff from the policy can provide cash liquidity for taxes that might otherwise force the sale of the business. The insurance can also provide a buy-out mechanism in case one of the children chooses another career. If one child wants to run the business and the other doesn't, the life insurance proceeds can be used not only to pay taxes but also buy out the interest of the other sibling without selling off pieces of the business.
 -- Here's another small business situation that a trust vehicle can help with: in this example, you have set up a retirement plan for your staff and yourself. Under ERISA legislation, penalties for abuse and/or misuse of these funds, even if it's done inadvertently, can be severe. But putting the retirement funds in a trust is one way to ensure they are administered properly.
 -- If you live alone, who would take care of your affairs if you are unable to do so?
 With a living trust, you appoint a trustee to take over your affairs when
you can no longer cope. The trustee pays every bill, even arranges for your care at home, or in a hospital or nursing home when need be.
 -- Do you have an heir who is not financially responsible, one who spends $10 for every $1 received? How can you make sure he (or she) uses the inheritance for college?
 One way is to place assets into an education trust for the heir's benefit and restrict the terms and conditions under which funds can be accessed. The assets can be earmarked for college costs. The heir cannot access them for any other purpose.
 -- Do you have an heir who is making a lot of money, so much that leaving him or her your assets would only add to the heir's own estate problems?
 You can create a generation skipping trust. The trust gives your child the income from the assets, but holds the assets themselves in trust for your grandchildren.
 -- How can you provide for your husband but make sure the children from your previous marriage receive the assets when he dies?
 You can put assets in a Q-TIP trust (qualified terminal interest property) which will provide for your spouse's health and maintenance through his life but revert to your estate when he dies so that your children have an inheritance.
 -- Do you possess an asset that has appreciated sharply in value, but you hesitate to sell it because of the capital gains tax penalties you'd incur?
 You create a Charitable Remainder Trust, place the portfolio of stock in that trust; the stock is sold and the proceeds reinvested. Taxes are deferred until your demise and you can live off the interest from the trust, provided you leave the asset to a charity.
 -- But what if you have heirs and want to benefit them as well?
 You can create a life insurance trust in tandem with the charitable remainder trust. Part of the interest from the charitable remainder trust pays the premium on the life insurance taken out on your life. Upon your demise, the assets in the charitable remainder trust go to your charity, but your kids get their due because the life insurance policy in the trust pays them.
 -- Can't an ordinary will take care of most of these situations?
 No, because assets named in your will are subject to the long and costly process of probate. But if assets have been placed in trusts during your lifetime, they will avoid probate and all the delays and expenses associated with this process.
 But Mr. Woods counsels prudence. Trusts are useful, but they are complicated. Be sure you get good advice. Merrill Lynch, he adds, is perhaps the first full-service investment firm to incorporate trust vehicles into the personal finance planning of the average individual.
 Merrill Lynch Financial Consultants may suggest the use of a trust vehicle. At Merrill Lynch Trust, the usual asset requirement is $100,000, much lower than the typical bank's requirement.
 Merrill Lynch Trust accounts are managed by Merrill Lynch Asset Management, its powerful billion-plus management resource, something banks simply can't offer.
 -0- 9/22/92
 /NOTE TO EDITORS: Mr. Woods is available for interviews./
 /CONTACT: Stephanie Stern of Stern & Co., 212-688-7878, for Merrill Lynch/ CO: Merrill Lynch ST: New York IN: FIN SU:


SM -- NYPFNS1 -- 1948 09/22/92 06:47 EDT
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Date:Sep 22, 1992
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