The process of an estate freeze usually takes place through an exchange of shares using various methods. It can be a complex process. The individual exchanges the growth shares (common shares) for preferential or preferred shares whose value will remain stable- futureproof. Future increases in the shares’ value will benefit the freezor’s beneficiaries rather than the freezor himself.
The process of settling an estate after death varies depending on how complicated the estate is. So, the answer to the title question is variable. It’s a situation like “How long is a piece of string?”
When to Trigger an Estate Freeze
Although there is no specific date or deadline to trigger an estate freeze, you want to do it as the value of the estate gets close to the capital gains deduction limit in terms of the state law.
Estate planning motivations are not the only reasons to affect an estate freeze. A share value freeze can help achieve other business, succession, and tax-planning goals. One factor (in family and non-family businesses) is the need or desire to ease entry of key employees into partial ownership of the enterprise. By integrating the next generation – be it family or employees – while he/she still has control, the author of the freeze can guide and nurture the successors, training them to eventually take over successfully.
If I Decided to Undertake an Estate Freeze, How Long Would It Take?
If you already own sufficient assets to fund your retirement, you may want to start an estate freeze as part of your estate planning. Early planning is important so that you can ensure that any excess growth will be transferred to your intended beneficiaries. The legal aspects can take a while to organize, get the paperwork completed to your satisfaction and that of the state law.
If you do implement a freeze, it is important to keep an eye on your circumstances to ensure that the freeze continues to meet your requirements. An estate freeze is a complex action and you must consider your lifestyle and your estate objectives.
Speak with a qualified tax and legal advisor to figure out if this strategy is the right one for you. Once you have evaluated the pros and cons of the process, engage the correct experts to implement the estate freeze for you and your beneficiaries.
Please remember that this should not be considered a substitute for personalized tax advice from your wealth advisors. Make an appointment with a Nour Private Wealth (NPW) wealth advisor to discuss the process of an estate freeze.
This commentary is provided for general informational purposes only and does not constitute financial, investment, tax, legal, or accounting advice. Please speak with your accountant about tax or accounting advice. Individual circumstances and current events are critical to sound investment planning and not all investments are suitable. Please speak with your investment advisor prior to investing.