LAW OFFICES OF

Boyd Boyd, P.C.

OPTIMAL BASIS INCREASE TRUST™ · PLAN BOTH SIDES OF THE TAX.

Your Estate Plan should consider the tax at death and the tax your loved ones may pay when they sell. Coordinate Estate Taxes, Capital Gains Taxes, and continuing protection around what your family keeps.

An Optimal Basis Increase Trust™ (OBIT) uses specialized Trust provisions to seek a favorable adjustment to the tax basis of eligible assets at a spouse’s or beneficiary’s death, when that adjustment improves the family’s overall result. The planning coordinates Estate Taxes, potential Capital Gains Taxes, beneficiary powers, and continuing Trust protections. An OBIT provision is a planning tool—not an automatic tax exemption or a guarantee of a basis increase.

A PUBLIC TAX RULING. A PRACTICAL REASON TO REVIEW YOUR TRUST.

In Revenue Ruling 2023-2, the IRS examined appreciated property transferred to an irrevocable Trust. The creator remained the owner for income-tax purposes, but the property was not included in the creator’s federal gross estate. At death, the property did not receive the claimed basis adjustment.

The distinction matters: income-tax ownership and Estate Tax inclusion are not the same thing. An irrevocable Trust’s label—and even who pays its income tax—does not establish that its assets receive a step-up.

This is a published IRS ruling, not a client story or an endorsement of an OBIT. Its lesson is to check the actual provisions and tax treatment before relying on a presumed saving.

Choose a question. The cards below will adapt to the concern you select.

YOUR QUESTION, ANSWERED

Protecting the Inheritance Includes Planning the Tax Your Family May Pay Later.

An Optimal Basis Increase Trust™ (OBIT) uses specialized Trust provisions to seek a favorable adjustment to the tax basis of eligible assets at a spouse’s or beneficiary’s death, when that adjustment improves the family’s overall result.

The planning coordinates Estate Taxes, potential Capital Gains Taxes, beneficiary powers, and continuing Trust protections. An OBIT provision is a planning tool—not an automatic tax exemption or a guarantee of a basis increase.

YOUR FAMILY’S FUTURE

You may have built wealth in a home, investments, or a business over many years. A large increase in value can also mean a large taxable gain when the next generation sells.

The goal is to leave your family more usable wealth while preserving the other intentions behind your Trust.

LOOK BENEATH THE LABEL

A plan can reduce Estate Taxes yet leave appreciated assets with a basis that produces a substantial tax bill on a later sale.

Review both sides of the equation: what the estate may pay at death and what your family may pay when assets are sold.

YOUR NEXT DECISION

Discuss which assets have appreciated and whether your existing Trust balances Estate Tax savings with future income-tax consequences.

YOUR QUESTION, ANSWERED

The Value Your Family Inherits and the Gain It Is Taxed On Are Different Numbers.

Tax basis is the starting figure used to calculate gain or loss on a sale. For qualifying inherited property, federal law generally adjusts basis to its fair market value at death, subject to exceptions.

When that value exceeds the existing basis, the adjustment is commonly called a step-up. It can reduce the taxable gain on a later sale; appreciation after the valuation date can still be taxable.

YOUR FAMILY’S FUTURE

For a family deciding whether to keep or sell an asset, basis can materially affect the money available after the sale.

Appraisals and basis records help turn a planning idea into a result that can be properly reported.

LOOK BENEATH THE LABEL

The rule does not apply identically to every asset. Annuities and retirement benefits require separate analysis; traditional IRA income generally does not receive the same basis adjustment.

The account’s balance is not a substitute for understanding its tax character. Coordinate Retirement Account Inheritance Planning separately.

YOUR NEXT DECISION

Discuss the assets your family may sell, their known basis, and the records needed to evaluate the potential tax consequences.

YOUR QUESTION, ANSWERED

Sometimes a Smaller Tax at Death Can Prevent a Larger Tax Later.

Yes, in appropriate circumstances. Including qualifying appreciated assets in an estate may permit a basis adjustment that reduces later taxable gains. The potential income-tax benefit must be compared with any additional federal or state Estate Tax and other costs.

Paying Estate Tax is not itself what creates a federal basis adjustment. The asset must meet the applicable federal basis rules; estate inclusion can qualify even when no federal Estate Tax is payable.

YOUR FAMILY’S FUTURE

The relevant question is how much the family keeps overall, and when the taxes would be paid. A proposed saving on a future sale is less valuable if no sale is likely.

Consider liquidity, the beneficiaries’ circumstances, expected ownership period, and the effect on other planning goals.

LOOK BENEATH THE LABEL

Illustrative arithmetic—not a client story or tax projection: an $800,000 gain avoided at an assumed 20% tax rate represents $160,000 of potential tax reduction. If a qualifying inclusion produced $60,000 of additional Estate Tax, the difference would be $100,000 before other taxes, costs, and timing effects.

Those figures are assumptions, not applicable tax rates or a predicted outcome. Your comparison must use the actual assets, available exemptions, deductions, and expected tax treatment.

YOUR NEXT DECISION

Discuss whether a potential basis increase would justify the Estate Tax cost for your family—and where the proposed tradeoff would not make sense.

YOUR QUESTION, ANSWERED

A Trust That Solved One Tax Problem May Need to Address Another.

Assets kept outside a surviving spouse’s federal gross estate in a Credit Shelter or Bypass Trust generally do not receive another basis adjustment solely because that spouse dies. Appreciation after the first spouse’s death can remain exposed to tax on a later sale.

Properly designed provisions may seek estate inclusion for selected assets where beneficial. The Trust’s powers and tax consequences must be reviewed before assuming that a second adjustment is available.

YOUR FAMILY’S FUTURE

Years can pass between spouses’ deaths. During that time, the assets held in a continuing Trust may appreciate substantially.

The best choice at the first death may need flexibility for different values, laws, and family circumstances later.

LOOK BENEATH THE LABEL

Credit Shelter Trusts can still serve important Estate Tax and family objectives. The issue is whether the particular provisions fit your combined tax and protection goals.

A Massachusetts Estate Tax benefit should be weighed against the potential loss of a later basis adjustment, rather than assumed to outweigh it.

YOUR NEXT DECISION

Discuss whether your existing provisions preserve appropriate options as assets appreciate and your family’s circumstances change.

YOUR QUESTION, ANSWERED

A Tax Benefit Should Not Quietly Rewrite Your Family’s Protection Plan.

Certain general powers of appointment can cause property to be included in a beneficiary’s federal gross estate. That inclusion may support a basis adjustment for qualifying assets, but the power’s terms and legal effects matter.

Ordinary discretionary access limited to health, education, maintenance, and support is different from a general power of appointment. It should not be assumed to create estate inclusion or a basis increase.

YOUR FAMILY’S FUTURE

You may want your child to benefit from the inheritance while keeping the remaining wealth available for descendants.

A power that changes who can receive assets, or exposes assets to claims, deserves the same attention as a potential tax benefit.

LOOK BENEATH THE LABEL

The review should address who holds or grants a power, what property it reaches, how it may be exercised, and any effect on creditor protection or the next generation’s inheritance.

Tax inclusion does not mean the property must be distributed outright, but retaining Trust ownership does not answer every protection question.

YOUR NEXT DECISION

Discuss the powers in your Trust, your intended beneficiaries, and how a proposed change could affect both taxes and continuing protections.

YOUR QUESTION, ANSWERED

Start With the Assets That Carry the Largest Unrecognized Gain.

Appreciated real estate, investment securities, and business interests may warrant a basis review. The appropriate treatment depends on ownership, the asset’s tax character, valuation, and applicable exceptions.

Massachusetts Estate Taxes can matter even when no federal Estate Tax is due. Other states’ tax and property rules may also affect a nationwide family’s plan.

YOUR FAMILY’S FUTURE

A vacation property, long-held portfolio, or family business may carry financial and personal significance. An intended sale and an intended long-term family holding can call for different decisions.

Identify which assets the next generation is likely to keep, sell, or use for support before choosing a tax approach.

LOOK BENEATH THE LABEL

An increase in one asset’s basis is not a reason to include every asset indiscriminately. Cash, loss assets, and retirement accounts present different considerations.

When value has fallen below basis, an adjustment can be a step-down. The design should evaluate that risk rather than promise an increase in every case.

YOUR NEXT DECISION

Discuss asset values, known basis, ownership, and the states involved so the planning can focus on meaningful opportunities.

YOUR QUESTION, ANSWERED

The Right Update Starts With What Your Trust Already Does.

A revocable Trust may be amended or restated to add appropriate provisions. An existing irrevocable Trust requires separate analysis of the document, available legal authority, beneficiary rights, and tax consequences.

Most Estate Planning at Boyd Boyd, P.C. is handled on a flat-fee basis. We explain the proposed scope and fee before you decide on legal work; the necessary review and changes depend on your existing plan.

YOUR FAMILY’S FUTURE

The value is a clearer understanding of the wealth your family can actually use after taxes—not simply adding another provision with a new name.

Compare what competing proposals address: tax coordination, beneficiary powers, implementation, valuation, and ongoing administration.

LOOK BENEATH THE LABEL

Irrevocable does not mean an update is always impossible, but an available modification should not be assumed to be legally or tax-neutral.

A low-priced document and a coordinated tax-and-protection plan may be different purchases. Comparing price alone can mean comparing apples to oranges.

YOUR NEXT DECISION

Discuss your current Trust, appreciated assets, and family objectives before deciding on the scope and fee for appropriate changes.

IN A REVIEWER’S OWN WORDS

★★★★★ 5-Star Google Review

“Boyd Boyd takes the time to walk you through the entire process of creating the trust that is best for you.”

— Edward Breen

Review excerpts reflect individual experiences and do not guarantee an outcome for another family.

F. Keats Boyd III and Whitney N. Tashjian help families think through important Estate Planning and Wealth Protection Planning decisions. At Boyd Boyd, P.C., the conversation begins with what you want to protect and what you want the next generation to understand.

An Optimal Basis Increase Trust™ (OBIT) uses specialized Trust provisions to seek a favorable adjustment to the tax basis of eligible assets at a spouse’s or beneficiary’s death, when that adjustment improves the family’s overall result. The planning coordinates Estate Taxes, potential Capital Gains Taxes, beneficiary powers, and continuing Trust protections. An OBIT provision is a planning tool—not an automatic tax exemption or a guarantee of a basis increase.

Tax basis is the starting figure used to calculate gain or loss on a sale. For qualifying inherited property, federal law generally adjusts basis to its fair market value at death, subject to exceptions. When that value exceeds the existing basis, the adjustment is commonly called a step-up. It can reduce the taxable gain on a later sale; appreciation after the valuation date can still be taxable.

Yes, in appropriate circumstances. Including qualifying appreciated assets in an estate may permit a basis adjustment that reduces later taxable gains. The potential income-tax benefit must be compared with any additional federal or state Estate Tax and other costs. Paying Estate Tax is not itself what creates a federal basis adjustment. The asset must meet the applicable federal basis rules; estate inclusion can qualify even when no federal Estate Tax is payable.

Assets kept outside a surviving spouse’s federal gross estate in a Credit Shelter or Bypass Trust generally do not receive another basis adjustment solely because that spouse dies. Appreciation after the first spouse’s death can remain exposed to tax on a later sale. Properly designed provisions may seek estate inclusion for selected assets where beneficial. The Trust’s powers and tax consequences must be reviewed before assuming that a second adjustment is available.

Certain general powers of appointment can cause property to be included in a beneficiary’s federal gross estate. That inclusion may support a basis adjustment for qualifying assets, but the power’s terms and legal effects matter. Ordinary discretionary access limited to health, education, maintenance, and support is different from a general power of appointment. It should not be assumed to create estate inclusion or a basis increase.

Appreciated real estate, investment securities, and business interests may warrant a basis review. The appropriate treatment depends on ownership, the asset’s tax character, valuation, and applicable exceptions. Massachusetts Estate Taxes can matter even when no federal Estate Tax is due. Other states’ tax and property rules may also affect a nationwide family’s plan.

A revocable Trust may be amended or restated to add appropriate provisions. An existing irrevocable Trust requires separate analysis of the document, available legal authority, beneficiary rights, and tax consequences. Most Estate Planning at Boyd Boyd, P.C. is handled on a flat-fee basis. We explain the proposed scope and fee before you decide on legal work; the necessary review and changes depend on your existing plan.

Boyd Boyd, P.C. · Updated October 4, 2026

Boyd Boyd, P.C. assists families nationwide. Families outside Massachusetts may come to our office to sign, or we may work with co-counsel licensed in their home state. Asset location, residence, and the law governing each arrangement affect how the work should be structured.

No. Planning addresses specific exposures and lawful protections. It does not eliminate liability, defeat every creditor, or guarantee a result. The facts, applicable law, implementation, and ongoing administration matter.

YOUR FREE ESTATE PLANNING STRATEGY SESSION

Discuss which assets have appreciated and whether your existing Trust balances Estate Tax savings with future income-tax consequences.

Greater clarity about what your family may keep after taxes. Fewer assumptions about what your Trust accomplishes. More confidence that an intended tax saving supports your family’s wider goals. A better-informed decision about which changes are worth making.

Your Strategy Session is free. Additional legal work requires a separate engagement. No protection or outcome is guaranteed.

(508) 444-9688 · Tell our team which inheritance concern brought you here.

1555 Iyannough Road, Unit 1BW • Hyannis, Massachusetts 02601

(508) 444-9688 • plan@boydandboydpc.com

© 2026 Boyd Boyd, P.C.

General information only. Legal advice depends on your circumstances and an attorney-client engagement.