Navigating the Estate-bequest Terrain

The son, on the other hand, will receive a “step-up” in basis for the securities he inherits and will not be taxed on the capital gained that otherwise would be attributed to the appreciation in value.

Had the donor simply left half of his assets to his son and alma mater, respectively, the college would have wasted half the benefit of the step-up in basis on the appreciated securities and the son would be burdened with half the IRD.