We all want to leave as much as to our heirs as possible, without them having to pay taxes on that inheritance. How can you ensure what's best for them after you'll be gone? In this video from an October installment of the Motley Fool Live "Financial Planning Power Hour" series, longtime contributor and Director of Investment Planning Dan Caplinger discusses the idea that the best strategy to follow is to invest for the long term and pass on shares of stock as their inheritance. Dan goes through the tax breaks as well as the obvious financial benefits of leaving as big a legacy for your loved ones as you can.

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Dan Caplinger: Are there some general things one can do to avoid paying taxes, potentially passing ones inheritance to their descendants? Todd, you're right. It's a big question, but I'm going to show your one thing. Because I think there's one thing that we as investors can do that's going to have the biggest impact on saving taxes during our lifetime while getting maximum amounts of money to our loved ones after we pass away.

That is owning high-growth stocks for the long run and holding onto them, not selling them. Here's the reason why. When you're holding those high-growth stocks, even as the price goes up and up, you're not taxed on that appreciation in value. You are only taxed on it if you sell it, which is what makes long-term investing such an advantage over short-term investing. You don't have to worry about capital gains until you choose to claim them when you sell the stock.

Under current law, there is even a better thing, is that if you own that stock when you pass away and you transfer it to an heir, that heir gets a stepped-up basis in that stock. Essentially all of the appreciation the stock throughout your lifetime, it passes free of income tax.

Now, if you have enough money that you have to worry about the state tax, that's a different situation. With a lot of folks with exemption amount above $11 million per person right now, I think it's about $23 million for couples. There's not a lot of people out there that are having to worry about that as state tax issue and so being able to avoid the income tax is a big deal now.

There are some proposals on the table to get rid of that stepped up basis in the future. So it's not a lot that that will be there by the time that you need it. But if there is one thing Todd that I had to say to help you with that question, that would be it, because I really feel like people discount the huge tax benefit of holding onto high-growth stocks for the long run without selling them, without generating capital gains. Just letting those gains rise and then potentially transferring them to their heirs tax-free. It's a huge benefit that somebody to take a close look at.