What is an estate freeze and how does it work?

An estate freeze is a legal estate planning strategy used to freeze the value of certain assets at a predetermined date. This strategy is used to reduce the effects of inflation on an individual’s estate, ensuring that the assets will remain worth the same amount in the future. In Utah, an estate freeze is commonly used to protect business owners from large capital gains taxes when transferring a business to their heirs. The estate freeze works by allowing the owner of the assets to transfer them to a trust while still retaining some control of the assets. First, the asset owner places the assets into a trust. The trust then issues “freeze units” to the asset owner. These units represent the asset owner’s right to the assets and can be sold or transferred to heirs at a later date. Once the units are issued, any increase in the value of the assets will go to the heirs and not to the asset owner. The asset owner is still able to receive income from the assets but the increase in value is frozen and not affected by future inflation. In Utah, estate freezes can be used to protect large estates from capital gains tax when the assets are transferred to heirs. Estate freezes can also be used to minimize estate taxes, reduce the risks of certain investments, and facilitate generational wealth transfers. By freezing the value of certain assets, estate freezes can help protect an individual’s wealth and ensure that the assets are worth the same amount in the future.

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What is an estate freeze and how does it work?

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