In estate planning, it is important to understand “stepped up basis.” When you buy property (for example, real estate or stocks) your “tax basis” in the property is the amount you pay for the property. When you sell the property, you have profit or “gain” equal to the difference between the sale price and tax basis. You have to pay “capital gains taxes” on your gain.
For example, suppose you bought a vacant lot many years ago for $10,000. Now, that same land is worth $110,000.