The key reason to use an estate freeze is to minimize the capital gains tax liability on assets left to children. It’s typically used when transferring a family business to the next generation. Capital gains on an owner’s interest in the company become taxable in the year of the owner’s passing. A significant tax bill could be a hard hit to the estate and heirs. Or, if the owner intends to cover the tax owing, an excessive sum can be a challenge to offset.
Enter the estate freeze. Simply put, this strategy locks in, or freezes, the business’s current fair market value for tax purposes. The business owner is responsible for paying tax on capital gains assessed at the time of the freeze, but it’s only due once the owner’s final tax return is filed. Future growth of assets from the time of the freeze becomes taxable to the children. An estate freeze can be established in which the parent still controls the business after the freeze.
An estate freeze can also be used for personal estate planning with such appreciating assets as vacation property or non-registered investments.
This material was prepared for and published on behalf of your financial advisor and is intended only for clients resident in the jurisdiction(s) where their representative is registered.
This material is provided solely for informational and educational purposes and is not to be construed as an offer or solicitation for the sale or purchase of any securities or as providing
individual investment, tax or legal advice. Consult your professional advisor(s) prior to acting on the basis of this material. Insurance products are available through advisors registered with
applicable insurance regulators. Individual equities are available only through representatives of Assante Capital Management Ltd. In considering any particular investment, please remember
that past performance is no guarantee of future performance. Although this material has been compiled from sources believed to be reliable, we cannot guarantee its accuracy or completeness.
All opinions expressed and data provided herein are subject to change without notice. Neither CI Assante Wealth Management or its dealer subsidiaries Assante Capital Management Ltd. and
Assante Financial Management Ltd., nor their affiliates or their respective officers, directors, employees or advisors are responsible in any way for any damages or losses of any kind whatsoever
in respect of the use of this material. CI Assante Wealth Management is a registered business name of Assante Wealth Management (Canada) Ltd. Assante Capital Management Ltd. is a member of
the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. Assante Financial Management Ltd. is a member of the Mutual Fund Dealers Association
of Canada and the MFDA Investor Protection Corporation (excluding Quebec). © 2022 CI Assante Wealth Management. All rights reserved.
