Abby Kassar - CPA, CA, CFP, TEP, Vice President, Business Owner Specialist, HNW Planning Services, RBC Wealth Management Services
“If you own all the shares of your business, an estate freeze can minimize taxes and provide you with more flexibility.”
If so, you may be limiting yourself from numerous tax and business transition opportunities.
Do you own all the shares of your business?
An estate freeze of your shares can help minimize taxes and provide you with more flexibility.
There are a few tax benefits of an estate freeze.
Current capital gain on your shares is frozen. Any future growth is then transferred to the next generation, limiting your taxes at death.
As well, lifetime capital gains exemption can be multiplied with family members upon a sale.
You may also be able to pay dividends to lower-income adult family members subject to “Tax on Split Income” rules.
For example, if your business is worth $5MM, an estate freeze would lock in that value in your name.
Any future growth above $5MM would then accrue to the next generation.
For tax reasons, an estate freeze should be set up at least two years in advance of a potential sale—so early planning is key.
We recommend you sit down with your team of advisors to determine if an estate freeze is right for you and your family.