Estate Planning: What Is a Step Up in Basis?

Passing on assets to your loved ones is a very common goal in estate planning. It involves many different assets that you could pass on outright to your loved ones through beneficiary designation forms, such as on a life insurance policy or retirement account or through strategies like planning

If you are passing on assets outside of retirement accounts, be aware that these could be impacted by a step up in basis. A step up in basis at a general level refers to an adjustment’s value reassessment based on inheritance. Imagine that something you purchase appreciates in value by the time you pass it on to your loved ones. If your loved ones then inherit that asset and sell it themselves, they would only pay the different between the selling price and the value of the item at the time it transferred to them.

The current step up basis is still in place, however, be aware of shifting changes in the national landscape. The current presidential administration, for example, has currently proposed plans to eliminate the step up in basis for any gains of $1 million or more. That would be increased to $2 million or more for married couples.

By having an established relationship with an experienced estate planning and asset protection planning lawyer in NH, you can increase your chances of being aware of these challenges before they occur and creating adaptable plans that align with your individual needs.


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