Should an individual who holds property acquired as part of a 1031 Exchange pass away, there is a tax policy commonly referred to as a "stepup in basis" or "stepped up basis" which stands for the proposition that upon the death of that taxpayer his or her heirs receive a “step up” in basis on the 1031 Exchange property to fair market value, which effectively eliminates any obligation of the heirs for payment of the deferred taxes. Thus, the heirs can liquidate the property and not have a taxable event if they sell the asset for the fair market value known at the time of inheritance.