Freezing assets can help avoid estate litigation

In developing a late-life plan, which is an important step towards all estate planning ventures, it is important to take stock of assets that the estate holder expects to grow in value. British Columbia residents with considerable assets or a portfolio of investments may be in a position where those assets could accrue value in the years leading up to late life. In some cases, an estate freeze can help to minimize income tax on those assets as well as helping to avoid estate litigation

An estate freeze limits value growth in assets by replacing original assets with ones that have a fixed value -- so-called "frozen assets". This means that future growth of these assets will benefit not the estate holder but the beneficiaries to whom these assets are bequeathed. However, it still allows the estate holder to maintain control over the assets until his or her death. 

Most often, in order to implement a freeze, the estate holder would transfer the assets to a holding company. In exchange, the company offers voting preference shares equal in value to the original assets at time of freezing. This can help limit probate fees, as well as ensuring that accrued value will transfer to the beneficiaries (often children or grandchildren) without influencing the income tax of the freezor. 

This can sound complicated to British Columbia residents, and indeed estate freezing can be. However, in the interest of avoiding estate litigation that could take place before or after the death of the estate holder, it can also be extremely valuable to consider. This is why seeking out the support of an experienced estate attorney can help an estate holder chart a course to the most beneficial estate plan for themselves and their family. 

Source: mondaq.com, "Should You Be Considering An Estate Freeze?", Dec. 23, 2016

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