DEFINITION:
An estate freeze is a strategy to “freeze” the current value of your assets (like a business or property) so future growth passes to your heirs tax-free. It’s like locking in today’s value for yourself while handing off tomorrow’s growth to your kids.
WHEN AND WHY IT’S USED:
This is used by business owners or individuals with appreciating assets (e.g., real estate) who want to minimize estate taxes. For example, if you own a company worth 5millionthatcouldgrowto5millionthatcouldgrowto20 million, freezing its value at 5milliontodaymeansyourheirsonlypaytaxeson5milliontodaymeansyourheirsonlypaytaxeson5 million, not the future $20 million.
IMPORTANCE IN ADVISOR – CLIENT COMMUNICATION:
Estate freezes address the fear of heirs losing wealth to taxes. By explaining this strategy, advisors reassure clients that their legacy won’t be eroded by the IRS. For example, “Freezing your business now could save your children millions in taxes later.”
This term also bridges financial planning and family dynamics. Advisors might ask, “Do you want your kids to inherit the business, or would you prefer liquidity?” The estate freeze strategy aligns technical solutions with emotional goals.
Lastly, it highlights proactive planning. Clients often delay estate discussions, but advisors use estate freezes to emphasize the urgency of acting before assets grow further and tax liabilities compound.
CONVERSATION EXAMPLES:
Advisor: “An estate freeze could lock in your company’s current value, so future growth goes to your daughter tax-free.”
Client: “I’m worried my kids will have to sell the house to pay estate taxes.”
Advisor: “Let’s explore an estate freeze. It’ll cap the taxable value at today’s price, so they keep more of the future appreciation.”