HOME

TheInfoList



OR:

An estate freeze is a legal estate-planning technique used in
Canada Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by to ...
to lock in the current value (and tax liability) of a capital property for one person, while attributing the value of future growth of that capital property to another person. This technique provides
taxation A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, o ...
,
estate planning Estate planning is the process of anticipating and arranging, during a person's life, for the management and disposal of that person's estate during the person's life, in the event the person becomes incapacitated and after death. The planning inc ...
and business advantages by ensuring current owners (e.g. parents) of an
asset In financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value of ownership that c ...
can continue to control that asset while allowing other persons (e.g. children) to benefit from (and be liable for the taxes payable on) the increase in value of the asset after the date of the estate freeze. Practical uses of an estate freeze include transfer of control of a privately held business between generations, deferral of the taxes payable upon the disposition of the shares of that business, income-splitting between family members and protection of assets from
creditor A creditor or lender is a party (e.g., person, organization, company, or government) that has a claim on the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property ...
s.Estate freeze
Retrieved 2012-08-01. Appreciating assets may be transferred from parents to their children on a tax-deferred basis, with the parents retaining control of the assets during their lifetime.


References

Taxation in Canada {{Canada-stub