This is basically urban legend at this point; "buy borrow die" is a tiny piece of the ultra-wealthy's financial strategy, at least when it comes to the "borrow" part, which is what everyone's focused on:

• In reality, the ultra wealthy do not borrow against a large fraction of their unsold gains. On average from 2004 to 2022, the top 1% of wealth-holders only borrowed 1-2% of their annual economic income.

• Borrowing while holding unrealized gains is, in fact, more of a middle-class activity than an ultra-wealthy one: Americans in the 50-90th percentiles borrowed 42% of their unrealized gains in 2022, compared to just 4% for the top 1% of wealth-holders.

• The primary tax avoidance strategy for the top 1% is not to borrow, but simply not to sell appreciated assets.

They donate it all to charities…. Charities they set up with their relatives on the boards of trustees, who then get paid salaries from the charity’s endowment.

Don’t the unpaid loans get collected from the estate upon death, and the inheritors get whatever is left?

Still a tax dodge, but sounds like the wealth would reduce each generation?

I also still agree capital concentration is still occurring. Probably due to those loans getting used for excessive gains on the stock market. But those buys and sells would trigger capital gains tax.

Again not saying I’m ok with all this wealth concentration, just feels like a lot of nuance is missing here.

I think the 'unrealized assets' should be taxed as 'realized' if they are used as collateral. Yes, it would affect the reverse mortgages and such, or home equity loans, but fuck it, I'd take those relatively small pains against the massive societal gains.

Oh was that why they threw the tomato sauce on that one painting? Now it all makes sense

Technically three words.

Why's that? You stated your opinion knowing that many people are ignorant of it, but failed to back it up. Why should we research your idea when we have ideas of our own? Don't suggest we're ignorant if you're not willing to take the first step in educating us. Your contempt feels good but doesn't solve any problems. Ciao

They get a painting worth 10K, get a loan for that, then get it appraised for 30K, get a loan on that from somewhere else and pay off the other one. That's one idea.

The second is they like assets that provide passive income and appreciate. You'll find a lot get into land as well and rental units.

This is the process, extremely simplified:

1. It’s 1970. You inherit $10M from your rich dad who worked hard.
2. Buy $10M index fund stock.
3. Borrow $10M against stock.
4. Live tax free off that $10M loan for 30 years (you can do that because you started in 1970 when it was cheap to buy a house).
5. Your stock is now worth $58M (avg 6% per year for 30 years)
6. Your kids inherit the stock at its current value and immediately sell $10M worth to pay off original loan. They pay no capital gains tax because the stock barely moved in the time between when they took ownership and selling it. All of the value growth since original purchase in 1970 is now tax free. The kids now start with $48M.
7. Repeat

Obviously, there is more to it than this. For example, this does not account for interest in the loan, or diversification of investments, or ability to hire accountants to maximize on the process.

For the individual wealthy, they aren't. Some loans might get paid off by taking another loan, but the goal is to take the loan to the grave. The loan would get paid after death because then the estate can sell the stocks without paying any capital gains tax.

Let's say you buy 1 million worth of stocks. The day before you die that stock is worth 51 million. If you cash out that stock you're paying capital gains tax on 50 million. Let's say the capital gains tax is 20% which means you'd pay 10 mil in taxes. So you get 41 million from the sale. Let's say the loan is exactly 41 million so to pay off the loan you get nothing.

But if you die and that stock goes to the estate they haven't gained any capital from the stock so when they sell it they pay no tax on it. The estate then sells the stock tax free to pay off whatever debt there was (the estate sells only 41 million worth of stocks keeping the 10 million on stocks). That 10 million is effectively free money that goes to the inheritor.

Basically it's all just tax evasion for the ultrawealthy. Except it's legal so technically it's not tax evasion. And realistically the numbers are even more astronomical than what I used as an example.

https://budgetlab.yale.edu/research/buy-borrow-die-options-reforming-tax-treatment-borrowing-against-appreciated-assets

It's actually a real thing.

Since taxes are paid when an asset is sold, not when it goes up in value, your net worth goes up with no tax liability change. When you die, the purchase price for tax purposes resets. Now the inheritor sells the assets. Since the sale price is essentially the same as the taxation price, there's no taxes.
You're borrowing today's money against tomorrow's value and taking the difference out of your death messing with taxes to free up the value.
From a financial perspective the time horizon for return doesn't matter, only that the return is balanced against the time. From that perspective, the people giving the loan have no reason to really care since it makes them look good and they'll at least not be working there when and if it goes wrong.

the stocks pay dividends,

Since the 1970s governments have been continually printing more money. This means that if you can get a low enough interest loan (i.e. by having a ton of money already so that you're low risk), the money you owe will devalue faster than interest accrues. You just keep doing that, and/or use it to invest.