The step-up basis rule is one of the most consequential features of US estate-tax law for HNW principals. When you hold an appreciating asset until death, your heirs inherit it at the asset’s value on the date of death — not your original cost basis. The embedded capital gain is wiped clean for tax purposes.
What it means in practice
You bought 50 BTC at $5,000. They are worth $90,000 each at the time of your death. If you had sold during your lifetime, you would owe capital gains on $4.25M. With step-up, your heirs receive the BTC with a fresh basis of $90,000 each. The $4.25M of appreciation never gets taxed at the income/capital-gains layer.
How this fits Buy, Borrow, Die
The full strategy: buy long-duration appreciating assets, borrow against them during your lifetime instead of selling, then die — at which point step-up resets the basis for your heirs. The combined effect can erase decades of capital-gains exposure.
Caveats
- Step-up does not exempt the asset from estate tax if your estate exceeds the exemption ($13.6M+ in 2026).
- Heirs must have access to keys for self-custodied crypto. Estate-planning structures must address this.
- This is well within published code — but rules can change. Current law as of 2026.
ARCrypto coordinates with members’ estate counsel on the structure. Book a private call or read the Buy, Borrow, Die field notes.