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What is an Estate Freeze?

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An estate freeze occurs when a business owner or individual freezes the value of their company or assets to avoid paying a high capital gains tax when passing their assets on to beneficiaries. Capital gains taxes in Quebec are quite high, so this is an attractive way to maximize the value of your hard-earned wealth when distributing your estate to your loved ones. In a medical business, this can also include handing the company over to a key employee.

Before conducting an estate freeze, you should consult trusted legal representatives to be sure your circumstances are favorable for such a significant legal action. Reach out to our knowledgeable lawyers today to learn more about estate freezes and see if this is the right course of action for you.

What Are The Benefits of an Estate Freeze?

Using an estate freeze can have many advantages when passing on your wealth to the next generation. The company’s value is essentially “frozen,” while the added value from its continued growth accumulates on behalf of the owner’s family and beneficiaries. This is a great way to reduce the taxes your loved ones must pay on your estate, especially capital gains taxes.

There are a few potential downsides that could occur in certain circumstances. You may not wish to use an estate freeze if there is not enough value in the company to merit a freeze, if you are expecting to sell your medical business, or if there is a potential breakdown between your beneficiaries from each other or the company. You can avoid these risks by working with good lawyers to create the best circumstances for your estate freeze.

What Factors Should Be Considered Before Implementing an Estate Freeze?

While it is important to consider the value your company holds and the beneficiaries’ relationship with you and the business, there are other items you should assess before beginning the estate freeze process.

Some important factors to consider before implementing an estate freeze are:

  • How much growth the company expects in future years
  • Whether the medical business will meet economic requirements once the freeze takes place
  • Who will operate the business after the freeze
  • Whether company documents need to be amended to allow for an estate freeze
  • At what amount the fixed shares will be valued

Can Our Estate Freeze Lawyers Help You?

When considering an estate freeze, you need reliable legal counsel to make the best decision for your medical business and your family. It can be enticing to hear that your loved ones could avoid paying the extraordinarily high capital gains tax. However, this can be risky for your business if you do not take the appropriate steps beforehand.

Our lawyers have a great deal of experience helping doctors, dentists, and other medical business owners develop a plan to find financial security for themselves and their families. We understand your unique situation as a medical business owner, and we will stand by you throughout this complex process. You have worked so hard for many years to build your business and wealth. Please act now to be sure that hard-earned wealth is passed on to your descendants in the best way possible. Contact us today at (438) 805-5515.

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