What is an estate freeze and how does it work?

An estate freeze is an estate planning tool often used in Florida and other states. It’s a strategy to protect assets from taxation and to make sure they are passed on to the next generation. An estate freeze works by transferring growth and appreciation of property to a trust or other estate-planning vehicle. This freezes the value of the asset at the time of the transfer, so that any future increases in the asset’s value are not subject to estate taxes when the original owner dies. The estate freeze process typically begins by transferring ownership of the asset (e.g., real estate, stocks, bonds, etc.) to a trust. The trust can have multiple beneficiaries, such as the original owner’s children, grandchildren, or other family members. The trust can be structured to benefit all the beneficiaries equally, or divided up according to predetermined criteria. Once the asset is transferred to the trust, any future increases in value of the asset are attributed to the trust, rather than the original owner. This means that the original owner’s estate will not be responsible for paying taxes on any future appreciation of the asset. Instead, the beneficiaries of the trust will receive the asset with no taxes due. An estate freeze is an effective way to protect the asset from estate taxes upon the original owner’s passing. It also allows the original owner to pass on the asset to beneficiaries while avoiding taxation. An estate freeze can be used in a variety of ways, depending on the individual’s specific estate planning needs.

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What is an estate freeze and how does it work?

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