What is an estate freeze and should I consider it for my will planning?

An estate freeze is a tax planning technique, usually involving a corporate reorganization, designed to lock in ("freeze") the current value of an owner's interest in a business or investment company, so that future growth accrues to the next generation. The goal is to limit the capital gains tax triggered when the freeze-holder eventually dies or sells.

In a typical estate freeze, the business owner exchanges their common shares for fixed-value preferred shares. New common shares — representing the future growth potential — are issued to the owner's children, a family trust, or other intended successors. The owner's tax exposure is capped at the value of the preferred shares at the time of the freeze.

While an estate freeze is not part of the will itself, it works alongside estate planning. The will addresses what happens to the preferred shares on death — including any remaining accrued value and the tax liability triggered on deemed disposition.

Estate freezes are complex and require coordinated advice from a tax lawyer and an accountant. They are most appropriate when a business or investment portfolio has already appreciated significantly and is expected to grow further. Done properly, they can result in substantial tax savings across generations.