Family Trust or Estate Freeze?

An estate freeze exchanges your growing common shares for fixed-value preferred shares, locking in today's value — and today's eventual tax liability — while new common shares capture all future growth in other hands. A family trust is often those other hands: a flexible vehicle that can hold the growth shares for a class of beneficiaries without forcing you to decide, today, who gets what.

These tools answer succession's two hardest questions — how much tax, and which people — which is why they so often appear together.

The freeze's power is certainty: your terminal tax exposure stops growing, future appreciation accrues to the next generation (or their trust), and the frozen preferred shares can be redeemed over time as retirement income. Its risk is freezing too early — capping your own wealth before you are financially secure. Refreezes are possible if values fall, but a freeze is fundamentally a bet that you have enough.

The trust adds control and multiplication: a discretionary trust lets trustees decide later how growth is allocated among children, and can multiply access to the lifetime capital gains exemption on a sale of qualifying shares. It also brings machinery — the 21-year deemed disposition rule that forces planning before each anniversary, annual T3 filings, trustee duties, and the ever-present TOSI rules governing any income actually distributed. Neither tool is casual; both reward owners who plan early and administer faithfully.