The step-up in basis under current U.S. law is the engine that makes buy borrow die work. Any legislation eliminating or capping the step-up would fundamentally change the math on every asset class listed here, which is why PPLI structures and foreign domiciles that carry no capital gains tax at all are increasingly used as a hedge against that policy risk.
Concentrated Public Stock Positions
A single-stock position in a large-cap or index-adjacent name is the cleanest buy borrow die asset available. Private banks in Switzerland, Singapore, and the U.S. will lend 50 to 70 percent of market value against a diversified blue-chip portfolio at rates ranging from SOFR plus 0.5 to SOFR plus 1.5 percent, currently putting all-in borrowing cost in the 5.8 to 7 percent range. When the holder dies, heirs receive the shares at fair market value on the date of death, wiping the embedded gain entirely, and they can sell immediately to repay the loan with zero capital gains tax due. This is the asset class the strategy was built around, and it remains the most liquid execution path. See how Lombard lending against securities compares to conventional financing structures.
Real Estate in Low or No Capital Gains Jurisdictions
Appreciating real estate in markets like Miami, Dubai, or Singapore generates equity that can be extracted via mortgage or pledged-asset lines without triggering a sale. U.S. real estate additionally benefits from the federal stepped-up basis rule, so heirs inherit at current market value regardless of how much the property appreciated over decades. Loan-to-value on investment real estate through private lenders typically runs 55 to 65 percent, and interest on debt secured by real estate frequently remains deductible against rental income, reducing the net carry cost further. Dubai is especially efficient because there is no capital gains tax and no inheritance tax under UAE law, making the step-up irrelevant since there was never a tax to avoid in the first place.
Private Equity and Venture Fund Interests
LP interests in established private equity funds can be pledged at 20 to 40 percent LTV through specialty lenders such as Cadence Bank, Blackstone Credit, and several European private banks. The low LTV reflects illiquidity, but the trade-off is that PE funds routinely compound at 12 to 20 percent net IRR over a decade, meaning the asset appreciates fast enough to dwarf the borrowing cost. The carried interest and capital gains inside the fund are all deferred until sale, so the holder accesses liquidity through loans while the tax clock never starts. At death, again, stepped-up basis under current U.S. law eliminates the gain entirely.
Life Insurance Policy Cash Value (PPLI Structures)
Private placement life insurance wraps an investment portfolio inside an insurance contract, letting the assets grow completely tax-free. The policyholder can borrow against the cash value at 85 to 90 percent of its balance, typically at rates set by the insurer around 4 to 6 percent, using the loan proceeds for any purpose with no income tax consequence. At death, the death benefit, which includes the grown portfolio, passes to beneficiaries income-tax-free under IRC Section 101(a), making this the only structure where the step-up is irrelevant because the gain was already sheltered. Minimum premiums to fund a viable PPLI structure generally start around $2 million, with setup costs in the $25,000 to $50,000 range through providers in Liechtenstein, Luxembourg, or Bermuda.
Art, Collectibles, and Royalty Streams
Blue-chip art from names like Basquiat, Koons, or Richter can be pledged through lenders such as Athena Art Finance or Sotheby's Financial Services at 40 to 50 percent LTV, with rates running roughly 7 to 10 percent. The asset carries no mark-to-market reporting obligation, no dividends, and no taxable income while held, making it a silent accumulator between loans. Music royalty catalogs and patent income streams work similarly, pledgeable at 30 to 45 percent of capitalized value, and both asset types pass at stepped-up basis at death. The main friction is illiquidity and appraisal costs, which run $5,000 to $25,000 per transaction for major art pieces.
Closely Held Business Equity
Ownership stakes in profitable private companies are the most complex but often the largest asset in a founder's estate. Specialty lenders and family offices will lend against audited EBITDA-backed valuations at 20 to 35 percent LTV, and some structures allow the business itself to service the debt using pre-tax corporate cash flow, which is a significant efficiency gain. At death, the company interest steps up in basis, and if structured correctly inside a grantor trust or family limited partnership, valuation discounts of 20 to 40 percent for lack of marketability or minority interest can reduce the taxable estate even further before the step-up applies. A Cayman or BVI holding company layered above the operating entity gives additional flexibility on succession and cross-border lending.
Things people ask first.
Does buy borrow die work in countries outside the U.S.?
Yes, but the mechanics shift depending on whether the jurisdiction has an inheritance tax, a capital gains tax at death, or a deemed-disposal rule. The UK and Australia both have deemed-disposal or carry-over basis rules that partially undermine the strategy, while the UAE, Monaco, and the Cayman Islands have no capital gains or inheritance tax at all, making the borrowing layer the only thing needed.
What loan-to-value ratio should I expect against a stock portfolio?
A diversified blue-chip or index portfolio at a private bank typically gets 50 to 70 percent LTV. Concentrated single-stock positions in volatile names get 30 to 50 percent. Crypto assets, even at major custodians, rarely exceed 30 to 50 percent LTV with significant margin call risk.
Is the interest on loans used in a buy borrow die strategy tax deductible?
In the U.S., investment interest expense is deductible against net investment income under IRC Section 163(d), which partially offsets borrowing costs. Interest on loans secured by real estate remains separately deductible against rental income. Interest on personal consumption loans is not deductible regardless of what collateral backs them.
What happens if the collateral drops and the lender issues a margin call?
The borrower must post additional collateral or repay part of the loan, exactly as with any secured lending. This is why practitioners size loans conservatively, typically at 50 to 60 percent of available LTV capacity, leaving a buffer before margin call thresholds trigger. Art and PE interests have less mark-to-market volatility but are also harder to liquidate quickly if a call comes.
Can a trust own the assets and still execute buy borrow die?
A grantor trust can hold assets, borrow against them, and still pass the assets with a stepped-up basis at the grantor's death as long as the trust is structured correctly and the grantor is treated as the owner for income tax purposes. Irrevocable non-grantor trusts complicate the step-up and require more careful planning, usually involving a swap power or intentional grantor trust provisions.
What is the minimum portfolio size to make buy borrow die worth structuring?
Most private banks require a minimum relationship of $5 million to $10 million in pledged assets to access Lombard-style credit lines at competitive rates. Below that threshold, margin loans through standard brokerage accounts are available but come with less flexibility and higher rates.
Which of these assets fits your borrowing structure right now?
The Offshore Playbook walks through how to layer the right asset class, the right lending jurisdiction, and the right trust or holding structure to execute buy borrow die with the smallest possible exposure to margin calls, estate tax, and policy risk. gramps.chat can help you map your current holdings to the right entry point.
Get the Playbook