Editor’s note: This is part 12 of an ongoing series about using trusts and LLCs in estate planning, asset protection and tax planning. The effectiveness of these powerful tools — especially for asset protection and tax planning — depends very much on how they are configured to work together and whether certain types of control over assets and property are surrendered by the property owner. See below for links to the other articles in the series.
Upstream basis planning is a strategy that involves gifting assets to someone who’s going to pass away before you in order to reduce capital gains taxes. This technique is reliant on the rule that to get a step-up in basis, assets must be included in the gross estate of a person who dies.
