First Interstate Bank of California's Trust and Private Client Services group has introduced an individual retirement account that extends the time in which assets can accumulate.

The so-called Enhanced IRA also minimizes estate and income taxes for beneficiaries by avoiding lump sum distributions when the client dies. It works by rolling over retirement account assets directly into subaccounts upon the client's death, bypassing estate and related taxes.

Beneficiaries also gain, since funds continue to grow tax-free until they are withdrawn from the account.

The Los Angeles-based banking company's product also takes advantage of California's community property rights to minimize estate taxes for surviving spouses.

By earmarking half the IRA as community property, each spouse's unified estate tax credit is used. These credits allow individuals to give up to $600,000 to beneficiaries with minimal tax consequences. As a result, married couples can leave a maximum of $1.2 million in IRA assets to beneficiaries without incurring estate taxes.

First Interstate is one of the first banks in the United States to offer the Enhanced IRA, according to Douglas F. McRae, manager of First Interstate's personal trust business development staff.

"I haven't heard of anyone else" offering this product, said Paul J. Groncki, vice president at Payment Systems Inc., a Tampa-based firm that tracks the private banking business.

IRAs "haven't traditionally been used as trusts that incorporate estate planning techniques," Mr. McRae said. "What First Interstate is doing is a good idea," Mr. Groncki said.

Marketing the product creates a prime opportunity for the banking company to sit down with clients and look at their balance sheets, he explained. However, Mr. Groncki said he was not sure how well the product would sell.

"On the one hand, we have the resistance of individuals who tend to put off thinking about their deaths," he said. "But on the other hand, institutions who can get people to think about estate planning have a leg up" on competitors.

"This is a small step in the right direction for private banking," Mr. Groncki said.

Estate planning and other trust services have been a very hard sell for banks, Mr. Groncki said.

"There aren't a lot of older people and it is much too early for the baby boomers to start thinking of estate planning," he explained.

Part of banks' problem in selling such services is that customers do not think of trust and estate planning as investment planning tools. An IRA with an estate planning feature may be just the ticket to entice people to use trust services, Mr. Groncki said.

Chase Manhattan Bank has promoted Mary Catherine Orr to senior vice president in charge of private banking relationships and mutual fund clients in North America.

Ms. Orr was previously a vice president in the U.S. Private Banking division.

In her new post, she will also be in charge of new business development, service delivery, and risk management activities for mutual fund and private banking clients worldwide.

Ms. Orr also oversees a network of managers in 60 countries.

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