An estate freeze is an effective planning strategy primarily used for which of the following objectives?

Question: An estate freeze is an effective planning strategy primarily used for which of the following objectives?

Answer options:

• To significantly reduce the annual corporate tax burden. ✅ To defer the taxation of capital gains on the growth of corporate assets to future generations.
• To eliminate any future capital gains tax on the frozen shares.
• To ensure all assets within the corporation are distributed equally among beneficiaries immediately.

Correct answer: To defer the taxation of capital gains on the growth of corporate assets to future generations.

Explanation: An estate freeze locks in the current value of the shareholder's interest, transferring future growth to new shares issued to next-generation beneficiaries, thereby deferring and shifting the capital gains tax liability on that future growth.