As your Estate Freeze advisors & Estate Administration Lawyer in Toronto, we will closely work with your accountant to organize your financials efficiently, resulting in an estate freeze without adverse tax implications. For an in-depth discussion on what a estate freeze entails, how it is conducted in Ontario and the benefits of having a professional estate lawyer throughout the process, please click here.
An estate freeze is a transaction aimed at fixing an asset’s fair market value for tax purposes. It provides the taxpayer to anticipate, with reasonable certainty, the tax liability found in subsection 70(5) of the Candian Income Tax Act that states that the taxpayer has sold their capital property at a fair market value after they have passed. Additionally, an estate freeze allows the taxpayer to defer the tax on the asset’s post-freeze growth until realized by the next generation.
What are the benefits of implementing an estate freeze?
Freezing the current value of the taxpayer’s shares could provide millions of dollars worth in tax deferrals. Additionally, it increases the chances of future growth for the generation that will proceed the taxpayer.
Exchanging the first generation shares for a fixed value ‘freeze share’ and implementing a notarized Family Trust to subscribe for the potential market ‘growth’ shares will allow the first generation to retain control of the company as Trustees. This act provides internal flexibility to transfer the shares to the next generation at any time during the tax-deferred period of the Family Trust.
Life Insurance Planning
Life insurance and an estate freeze generally go hand in hand. Your fixed value freeze shares should provide a reasonably fixed value tax estimate for Life Insurance purposes, to help decrease the chances of being underinsured or paying extra.
What is a Vanishing Estate Freeze?
As a shareholder of a corporation becomes older and wishes to pass the future growth of the business to the next generation or key employees, they can implement an estate freeze to increase their financial success.
A Vanishing Estate Freeze happens if the taxpayer or executor of the estate freeze receives an income by way of a dividend from the corporation, where the income stream can still be maintained by way of the corporation redeeming their portion of their freeze shares during the taxpayer’s lifetime.
The Freezor will slowly reduce their interest in the corporation resulting in reduced tax upon their death. As the value of the freeze shares at the time of death has been reduced through prior redemptions, the value of the individual’s estate will decrease as the taxpayer will no longer have any shares in the corporation.
Reliable Estate Freeze Lawyer in Toronto
As an experienced probate and estate administration lawyer, Matthias Duensing will work closely with you and your business partners to achieve favourable objectives using highly effective tax estate freeze strategies that suffice the Canada Revenue Agency. Begin your estate planning and increase your chances of a successful estate freeze by setting up a complimentary consultation today.
To schedule an appointment or contact us for a consultation, email us at firstname.lastname@example.org or call us directly at (416) 601-4769.