A key disadvantage of implementing an estate freeze, particularly for a closely held corporation, could be:

Question: A key disadvantage of implementing an estate freeze, particularly for a closely held corporation, could be:

Answer options:

• It eliminates the ability to claim the Lifetime Capital Gains Exemption on the new common shares. ✅ The complexity and professional fees associated with the legal and tax structuring required.
• It restricts the company's ability to raise capital from external investors.
• It mandates the immediate sale of a portion of the business to fund the freeze.

Correct answer: The complexity and professional fees associated with the legal and tax structuring required.

Explanation: Estate freezes are complex transactions requiring detailed tax and legal planning, resulting in significant professional fees. This complexity is a considerable drawback for many business owners, especially those with smaller enterprises.