An estate freeze forces you to think far down the road

Meet your family's needs by planning early.

Philip Steury Photography/Shutterstock

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By Sigrid Forberg Apr. 22, 2022

Carrying out an estate freeze is a handy tax-planning option for business owners who hope to prepare for, and minimize, their estate taxes one day.

It’s simple enough from the business owner’s perspective: nearing retirement, they’re able to freeze the value of their business. The freeze helps the business owner figure out what their estate will owe in taxes one day. The owner can then pass off any future growth to the next generation.

“The idea is basically that you're passing on the tax liability to the next generation,” says Kris Rossignoli, private tax manager at Cardinal Wealth in Toronto.

The transaction is formalized by the owner trading in their common shares in the business for frozen ones, which can then either be transferred to new shareholders or a trust.

Which option they decide to use depends largely on their succession plan and what will be most tax efficient for their situation.

About the Author

Sigrid Forberg

Associate Editor

Sigrid’s is Money.ca's associate editor, and she has also worked as a reporter and staff writer on the Money.ca team.

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