Step-up in basis mitigates estate tax
The hosts argued that most US households do not need to worry about federal estate taxes because the lifetime exclusion is massive and assets receive a step-up in basis to fair market value upon death.
The argument
The speakers discussed how the step-up in basis resets the cost basis of inherited assets (like long-held stocks) to their value on the date of death, eliminating the decedent's unrealized capital gains tax liability for the heir. They noted that while federal estate taxes affect very few people, some state-level estate taxes (like New York's cliff tax) require careful planning.
The thesis, stress-tested
✓ What validates it
- ✓Revisions to the federal lifetime estate tax exclusion limits
- ✓State-level legislative changes to estate tax thresholds
▸ Risks discussed
- ▸State-level estate taxes may have low thresholds or 'cliff' rules that trigger tax on the entire estate if exceeded by even a dollar
- ▸Future changes in tax laws could alter or eliminate the step-up in basis rule
Hear it yourself
"You could round to zero on the number of US households that pay estate tax each year because the lifetime exclusion is so massive, so, so massive. So when you hear something like the death tax thrown around, like it's mostly complete nonsense."
00:00 / 00:17
AFFILIATE LINK · ZORTIX MAY EARN A COMMISSION · NEVER A RECOMMENDATION TO TRADE