To Freeze or Not to Freeze, That Is the Question

Before we dive into this interesting topic, let’s start with the definition of an estate freeze. An estate freeze is a common planning strategy for business owners to pass the growth of their company onto the next generation and cap the value that will be subject to income tax on the sale of their shares in the company or on their death.

The question of whether to freeze and when, is something your business owner clients should consider.  Many things come into play when deciding when to freeze, including the value of the company, age of the parents who are considering a freeze, as well as the ages of the children to whom the growth is to be passed. Additionally, in today’s market, there are many other reasons to contemplate freezing the value of the company now – has the pandemic caused the value of the company to decline? Speculation that the capital gains rate might increase from 50% to 75%, which would increase the tax liability on death for the shares, is another reason to look at implementation of an estate freeze sooner rather than later.

To learn more about the ways of implementing an estate freeze for your clients and the many potential advantages of using life insurance for estate and business succession planning purposes, be sure to read Glenn Stephens’, PPI’s VP of Planning Services, article for Forum magazine Estate Freezes, located on our Professional Resource Centre (Advisor login required).

If you have questions regarding estate and tax planning, contact your local PPI office.

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Is an Estate Freeze Something I Should Consider for my business?