Page 168 - A Canuck's Guide to Financial Literacy 2020

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Advantages of an Estate Freeze

• Freezing the Gains
Through an estate freeze, you’re able to freeze the value of an appreciating asset in
order to save on taxes. In addition, you would be aware of the tax liability that would
be triggered in the future which can be managed through purchase of an insurance
or savings over time.

• Maintain Control
Parents would receive equal consideration of value for assets transferred in. The
consideration would often be preferred shares in which allow the parents to maintain
control.

• Income Splitting
Growth of an appreciating asset is attributed to beneficiaries. There may be an
opportunity of income splitting without attribution of income through usage of a trust.

• Capital Gains Exemption
Through the Lifetime Capital Gains Exemption (LCGE), there could be tax benefits
on the disposition of private shares for a qualifying small business corporation.

• Reduce Probate Fees
By freezing the assets, any future growth of the shares will not be attributed to the
shareholders’ estate and not subject to probate fees.