The adjustment in basis is a crucial tax consideration – what can it mean for you?

A sometimes-overlooked component of estate planning, the adjustment in cost basis, can be a taxation game-changer. Under this tax provision, an inherited asset’s cost basis is determined not from the owner’s original purchase price, but from its value when inherited after death. Since most assets appreciate over time, this adjustment in basis is often called a “step up” in basis. A step-up can mean significant savings in taxes when an asset is sold. It’s a powerful way for beneficiaries to maximize their inheritance.

Some scenarios point to Yes, others say No.

If a Roth IRA conversion means tax-free withdrawals in retirement and a more substantial inheritance for your heirs later on, it sounds like a no-brainer. But converting a traditional IRA to a Roth doesn’t make sense for everyone.