Buy Borrow Die Strategy: How the Ultra-Wealthy Pay Zero Tax on Billions

You buy and hold an appreciating asset, typically public equities, private company stock, or real estate. You then borrow against that asset using a securities-backed loan or Lombard facility, receiving cash without a taxable realization event. When you die, the asset transfers to your heirs with a cost basis reset to fair market value on the date of death under IRC Section 1014, meaning decades of embedded gains vanish permanently. The loan balance is repaid out of estate assets or refinanced by heirs, who immediately borrow again at the new stepped-up basis.

The borrow step is where most readers lose the plot. A standard margin account through a retail broker is not the right tool, because margin calls, forced liquidation risk, and broker discretion can blow up the structure. The correct instrument is a Lombard loan or securities-backed line of credit from a private bank, where the lender agrees to a defined LTV ratio, a fixed or floating rate, and explicit protections against forced liquidation. Swiss private banks including Julius Baer, Pictet, and Lombard Odier routinely extend these facilities at 40-70% LTV against concentrated equity positions. For a detailed comparison of the specific loan structures you should consider, see Lombard Loan vs SBLOC: Which Portfolio Lending Structure Actually Wins.

Not all assets work equally well. The highest-efficiency assets are low-dividend, high-growth public equities held in taxable accounts, because dividends trigger ordinary income tax annually and dilute the deferral advantage. Concentrated founder stock is the canonical use case. Real estate works well through the same logic but adds depreciation recapture complexity at death. Whole life insurance cash value is another strong vehicle because policy loans are not taxable events and the death benefit transfers income-tax-free. Private equity fund interests generally work but face the problem of capital calls requiring cash, which can force liquidations at inopportune times.

Buy borrow die only works permanently if the asset actually passes through your estate and receives the Section 1014 step-up. Assets held in an irrevocable trust, including most GRATs and SLATs, do not automatically receive a step-up because they are outside your taxable estate. This is the critical tension: assets transferred out of your estate to avoid estate tax also lose the step-up benefit. The practical resolution used by most ultra-high-net-worth families is to leave the highest-gain, hardest-to-value assets inside the estate to capture the step-up, while shifting other wealth through trusts to reduce overall estate tax exposure. A family office structure is typically required to manage these competing objectives across multiple asset classes.

The IRS has proposed rules under the Inflation Reduction Act era to target certain related-party loan arrangements and grantor trust structures, but as of 2024 the step-up under Section 1014 remains fully intact for assets held in a taxable estate. The Biden administration's proposed mark-to-market taxation for billionaires never passed. The current real risk is the 2026 estate tax exemption sunset, which drops the per-person exemption approximately in half, creating urgency for families with estates between $7M and $27M to act before year-end 2025. Buy borrow die itself is not under active legislative attack, though it features prominently in ProPublica-style reporting that generates periodic political pressure.

Below $5M in investable assets, the friction costs of a private bank Lombard facility typically exceed the benefit, and a standard SBLOC through Interactive Brokers or Schwab is the more realistic entry point. Above $5M, the strategy becomes genuinely powerful. Above $25M, a full private banking relationship with a named relationship manager, custom LTV negotiation, and multi-currency borrowing becomes accessible. You need a tax attorney familiar with securities law, not just an estate planner, to structure the loan covenants in ways that do not create a constructive sale under IRC Section 1259. Setup costs for a proper structure including trust documents, loan agreements, and tax opinion letters run $15,000 to $50,000 depending on complexity.