The stepped-up basis does most of the heavy lifting: heirs generally inherit at the property's fair market value as of the date of death. If a home was bought decades ago for a low price and is worth far more now, the heirs take it at today's value, and only gains above that new basis are potentially taxable if they later sell. That can wipe out most or all of the appreciation the original owner would otherwise have faced. A real example makes it concrete. A condo bought for $127,000 in the 1980s and worth $463,000 when the owner passed transfers to the heirs at the $463,000 basis, and the decades of gain in between effectively reset. To make the handoff smooth, hold the real estate in a properly funded living trust. The trust lets the property pass without probate, which saves heirs time, cost, and hassle, and it doesn't have to be an elaborate structure to do that job. Two cautions. Estate and tax rules are detailed and they change, and the right setup depends on your state and your situation. Treat this as the framework, then confirm the specifics with an estate attorney and a CPA before you act. Done correctly, passing appreciated real estate to heirs is one of the most effective ways families move wealth across generations.