An estate freeze fixes the value of the asset that is frozen,
such as shares of a corporation, in the hands of the owner until
the time of death, allowing the freezor to calculate the expected
tax liability that arises on death. In the usual course of
business, the deceased will be deemed to have disposed of all
capital assets immediately prior to death at their fair market
value determined on that date. The tax, which is now imposed on
one-half of the capital gain is based on the difference between the
cost base of the relevant asset and its fair market value at the
date of death. Without the estate freeze, the amount of the gain
would be expected to increase over time.
A further benefit of an estate freeze is the accrual of the
post-freeze growth in value in the hands of other persons, usually
the owner's family. This makes the estate freeze an effective
way of transferring value to the future generation, and hopefully,
defer the tax that would accrue on the future
