By David A. Altro and Jonah Z. Spiegelman
When you own a business with substantial earnings, an estate freeze can keep tax costs down.
Canada imposes a capital gains tax at death, which says a person who dies is deemed to have sold all capital assets at fair market value immediately. The proceeds are taxed as capital gains in the deceased person’s terminal tax return.
Without proper planning, this means that shares of closely held corporations are exposed to significant tax liability. An estate freeze can help mitigate that.
Estate freeze basics
This strategy freezes the corporate capital gains taxable in your estate. After a properly structured freeze, any further growth in the company’s value will accrue not to you, but rather to your successors or to a discretionary trust set up as part of the freeze.
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Ong Financial Planning Services Ltd.
John Ong, CFP, CHS, CPCA, CCS
Financial Planner
Tel: (604) 676-1088
Email:
1275 West 6th Avenue 3rd floor
Vancouver, BC
V6H1A6