Thanks for this great article, so many people are unaware of step-up basis and why transferring assets during life is not necessarily the wisest thing to do. With my own mother I saw a curious phenomenon take place, which is that she became increasingly unwilling to sell assets that had a low cost basis because she saw the opportunity of her death to reset the ledger. This meant she died with a wildly un-diversified portfolio that could have financially ruined her had the asset depreciated - diversification would have been expensive, but it's what any financial advisor would have recommended (and many did). Luckily the asset did not depreciate but grew. Once she died we all sold it and diversified, and I think she would be pleased to know that a position she inherited from her father and held for almost 50 years, through multiple splits and acquisitions, created financial security for her kids.
Thanks for this great article, so many people are unaware of step-up basis and why transferring assets during life is not necessarily the wisest thing to do. With my own mother I saw a curious phenomenon take place, which is that she became increasingly unwilling to sell assets that had a low cost basis because she saw the opportunity of her death to reset the ledger. This meant she died with a wildly un-diversified portfolio that could have financially ruined her had the asset depreciated - diversification would have been expensive, but it's what any financial advisor would have recommended (and many did). Luckily the asset did not depreciate but grew. Once she died we all sold it and diversified, and I think she would be pleased to know that a position she inherited from her father and held for almost 50 years, through multiple splits and acquisitions, created financial security for her kids.
I love this story. What a fantastic legacy she was able to leave.
So helpful, as always!
Fascinating, I had no idea.