Plain English
Step-up basis is a US tax provision that resets the cost basis of inherited assets to fair market value at the date of death. The structural effect: any embedded capital gain in the asset is permanently erased for the heir. They can sell immediately at no tax cost.
How it actually works
If you bought Bitcoin at $5,000 and pass at $200,000, your cost basis was $5,000 and your unrealized gain was $195,000. Without step-up, your heir inherits that basis — they would owe tax on the full $195,000 when they sell. With step-up, your heir’s basis becomes $200,000 (date-of-death fair market value), and the prior gain disappears for tax purposes.
What it means for you
For HNW members, step-up basis is the structural payoff of the buy-borrow-die strategy. Borrow against the asset during life to fund lifestyle; never sell; pass it at step-up; the embedded gain becomes tax-free for heirs. Whether this provision survives future tax reform is a real risk, but as of 2026 it remains intact.
The curriculum covers step-up basis as the third leg of buy-borrow-die, including estate-planning coordination to make sure heirs actually receive stepped-up assets cleanly.
Educational content only. Not investment, tax, or legal advice.