The wealthiest families don't sell assets. They buy, borrow against them, and let the step-up in basis do the rest. It's not a loophole, it's a deliberate strategy.
There is a wealth transfer strategy that almost nobody talks about outside of institutional finance. It has no official name. People who use it call it "buy, borrow, die" - and once you understand how it works, you will see why it is so effective and why so few advisors ever explain it.
The strategy has three steps. You buy appreciating assets - equities, real estate, a business. You borrow against them at low rates rather than selling them. And when you die, your heirs inherit the assets with a stepped-up cost basis, wiping out the embedded gain entirely. The loan gets repaid from the estate. The gain disappears. The wealth transfers intact.
The core insight is that borrowing is not a taxable event. Selling is. When you sell an appreciated asset, you crystallize a gain and pay tax on it immediately. When you borrow against the same asset, you get access to the same liquidity - with no tax bill, no sale, and the asset continuing to compound.
The step-up in basis is the mechanism that makes this work. When you die, your heirs inherit your assets at their fair market value on the date of death - not your original cost basis. If you bought a stock at $10 and it is worth $100 when you die, your heirs inherit it at $100. The $90 gain you never realized may disappear permanently under current law.
Combined with a borrowing strategy, this means you may be able to access liquidity throughout your lifetime without triggering the gain - and then have the gain potentially eliminated entirely at death. The loan gets repaid. The estate passes the assets to heirs with a clean basis.
This is not a strategy reserved for billionaires. Any investor with meaningful appreciated positions - a concentrated stock, a real estate portfolio, a business interest - can use some version of this framework. Box spreads, margin loans, and other borrowing mechanisms give you access to capital at low rates without forcing a sale. The step-up in basis is available to anyone. The planning is in combining them deliberately.
At STQ, this kind of coordination - between your investment strategy, your borrowing capacity, and your estate plan - is core to how we think about wealth management. These strategies do little in isolation, but they compound when they work together.
Interested in how this strategy might apply to your situation? The Portfolio Diagnostic is where we start.
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