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You never have to settle the debt. You die with the debt and the assets and your estate settles the debt then passes the rest in to your heirs

by HWR_14 4y ago

lesuorac 4y ago
To piggy back on this a bit, there's something cost step-up cost basis and so while you pay have bought stock at 1$ and it appreciated to 100$ your estate's cost basis will be 100$ so there is 0 capital gains. Which means that the loan can be paid off without paying any capital gains tax.
- missedthecue 4y ago
  heirs don't inherit debt. Your debt will be settled by the estate which will pay the tax. What's left will be passed down to your children/heirs.
  - jjeaff 4y ago
    The step up basis rule applies to the estate and it is stepped up to the current value on the date of death. So the estate settles the debt and pays no capital gains tax on any assets that had to be sold to pay off the debt. Then, the remaining assets go to the heirs. Or, if it is setup like most super wealthy, the assets left in the estate will more or less be cancelled out leaving little in the estate thus avoiding estate tax. Most of the assets will have already been passed along or will remain in various trusts and non-profits for the benefit of the heirs.
    - missedthecue 4y ago
      Only counts for estates less than $11.2 million. Again, useful for the middles class. Meaningless if you're Bezos.
      - jjeaff 4y ago
        No, I don't believe there is a limit for the step up rule. You are thinking of the estate tax exemption. That is avoided through other loopholes.
      - lesuorac 4y ago
        [Citation needed] Step-up cost basis is useless for a middle class estate because below $11.2M you don't pay an estate tax. [1] Propublica has done a lot of research of this which you should read. [2] [1]: https://en.wikipedia.org/wiki/Tax_Cuts_and_Jobs_Act_of_2017#Estate_tax https://en.wikipedia.org/wiki/Tax_Cuts_and_Jobs_Act_of_2017#... [2]: https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax https://www.propublica.org/article/the-secret-irs-files-trov...

You never have to settle the debt. You die with the debt and the assets and your estate settles the debt then passes the rest in to your heirs

by HWR_14 4y ago

You never have to settle the debt. You die with the debt and the assets and your estate settles the debt then passes the rest in to your heirs

lesuorac 4y ago

To piggy back on this a bit, there's something cost step-up cost basis and so while you pay have bought stock at 1$ and it appreciated to 100$ your estate's cost basis will be 100$ so there is 0 capital gains. Which means that the loan can be paid off without paying any capital gains tax.

missedthecue 4y ago
heirs don't inherit debt. Your debt will be settled by the estate which will pay the tax. What's left will be passed down to your children/heirs.
- jjeaff 4y ago
  The step up basis rule applies to the estate and it is stepped up to the current value on the date of death. So the estate settles the debt and pays no capital gains tax on any assets that had to be sold to pay off the debt. Then, the remaining assets go to the heirs. Or, if it is setup like most super wealthy, the assets left in the estate will more or less be cancelled out leaving little in the estate thus avoiding estate tax. Most of the assets will have already been passed along or will remain in various trusts and non-profits for the benefit of the heirs.
  - missedthecue 4y ago
    Only counts for estates less than $11.2 million. Again, useful for the middles class. Meaningless if you're Bezos.
    - jjeaff 4y ago
      No, I don't believe there is a limit for the step up rule. You are thinking of the estate tax exemption. That is avoided through other loopholes.
    - lesuorac 4y ago
      [Citation needed] Step-up cost basis is useless for a middle class estate because below $11.2M you don't pay an estate tax. [1] Propublica has done a lot of research of this which you should read. [2] [1]: https://en.wikipedia.org/wiki/Tax_Cuts_and_Jobs_Act_of_2017#Estate_tax https://en.wikipedia.org/wiki/Tax_Cuts_and_Jobs_Act_of_2017#... [2]: https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax https://www.propublica.org/article/the-secret-irs-files-trov...