Do all assets get a stepped-up basis at death?
No. First of all, it is strictly speaking not a “stepped-up” basis. It is a new basis equal to the fair market value of the asset on date of death. It is quite possible to suffer a step down in basis. Assets that receive a new basis are real estate, stocks, tangible assets, and most garden-variety assets. However, many important assets do not receive a new basis at death. The most common include the “tax deferral” vehicles: IRAs; Qualified Retirement Plans (e.g., 401(k)’s, 403(b)’s, Keogh’s, etc); US Savings Bonds; and annuities. Depending on circumstances, these vehicles may continue to afford some degree of tax deferral after the death of the original owner.
