Post #77047 by albaby1 on the US Policy board

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So don't they ever have to pay off these loans? Don't the lenders ever collect? And if they do, where to the billionaires get the funds to pay?

I am not a tax lawyer, but my understanding is that these loans don't get paid off while the owner is alive. They get paid off when the owner dies. The assets pass into the estate, which receives the benefit of the stepped-up basis. Assets can then be sold to pay off the loans before distribution to the beneficiaries.

The loan gets paid back, but not until all of the tax liability on the capital gains has been washed away by the death of the owner.

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