Want your family to really love you? One term: stepped-up basis. You are going to love Internal Revenue Code § 1014(a) because it could save you or your loved ones taxes.
Let’s say the family farm your parents give you the family farm. You know if you sell it, the IRS will tax you, essentially, upon the difference between what was paid (cost basis) for the farm (perhaps a low price many, many years ago) and the price for which you sell it today.
You can pass along assets in a better way through your estate plan. Then, your loved ones may not pay tax on the difference between their sale price and your cost basis. Instead, they can have the asset appraised as of your death, and use that recent appraisal figure as their stepped-up basis. With that, they pay only the difference between the sale price they receive and that new stepped-up basis.
It is simple to imagine the tax difference can be astounding, especially where an asset may have been held 30-40 years.
Love your family. Give them more by helping them save on taxes.
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