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Estate freezing

Estate freezing

Estate freezing is a tax planning method that allows incorporated businesses to lock-in the value of their shares by transferring future share appreciation to selected successors.

Estate freezing allows you to:

  • transfer to selected people (children, grandchildren, key employees) future appreciation of company shares, and in so doing defer taxes
  • lock-in shareholders’ current share value to reduce their tax burden
  • select a share capital structure that meets each successor’s preference and needs

Entire estates or a portion of estates may be frozen. Shareholders can thus transfer their shares to the next generation while maintaining control over the company, and, if appropriate, continue earning dividend income on the frozen shares.

The shareholders agreement

An estate freeze requires a shareholder agreement be drawn up. The agreement spells out how shares can be disposed of, i.e., whether they can be bought, bought back or transferred.

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