this post was submitted on 16 Feb 2026
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A Boring Dystopia
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If all the assets are secured by loans, then they inherit fuck all. They don't magically not owe loans or not pay interest.
I'm not even close to the type of person where this strategy is an option, but the magic is in the stepped-up basis from what I understand.
Let's say an asset is purchased for $1 million, held until it's worth $10 million, and used to secure a $5 million loan. If you sell the asset, you owe taxes on the $9 million capital gain. If you die, the asset's value "steps up" to the new baseline of $10 million. Your heir could then sell it with no capital gains tax, and pay off the loan and pocket the rest. If they hold onto the asset, and it appreciates to $11 million, they would only owe taxes on the gain of $1 million, not $10 million.
The whole scheme makes sense when it's applied to a random farmer inheriting land from his parents: you dont want to force him to sell the land to pay capital gains. It makes a lot less sense when it's someone inheriting stocks worth the GDP of a country.
For the ultra wealthy, the value of their assets goes up faster than the interest rate of the loan.
Yep, you need a proper market crash for the loans to be called in. That's when it gets fun.
It’s complicated…
The estate pays the loans back, but as the assets appreciate, the loans are covered….
The trick is moving your assets around, so that you personally own very little, and they have trusts or LLCs that own the assets so there isn’t inherent tax liability
Shrug fuck us.
Yachts don't appreciate but yes, and inflation eats the debt so they win both ways.
Boats (yachts)
A hole in the water into which one throws money…