In this world nothing can be said to be certain, except death and taxes. Benjamin Franklin wrote that in a letter to a friend late in the 18th century while reflecting on his own mortality.  Although you can’t always plan when you will die, you can plan how much tax you will owe and how to pay those taxes. – enter estate freezes.

Especially for entrepreneurs, business owners, and high value asset owners, an estate freeze is one of the most tax efficient vehicles to transfer future asset growth from one generation to the next. The concept is simple; while you are alive, the value of your business is ‘frozen’, and you, the business owner, will acquire preferred (or ‘frozen’) shares that have a total value equal to your business’s valuation on the day you froze your business. Then, a second set of shares are acquired by your heirs called ‘common shares’ (or ‘growth shares’) that have an equal value to the growth of your business above the value of your preferred shares. When you pass away, your estate will owe tax on capital gains realized on your preferred shares, with the growth of your company being deferred to the next generation.

To make a simple example: If you start your business with $1 million of capital, and then freeze it when it’s valued at $10 million, and you pass away when your business is worth $15 million, your estate would recognize a capital gain of $10 – $1 = $9 million dollars. The remaining $5 million would be deferred to the next generation.

Having an exact forecast of your future tax liability can help you plan for the future to ensure your business will survive after your death. Liquidating assets or taking cash out of the business to pay estate tax, which may require paying tax on proceeds extracted from the business for this purpose, could leave your heirs financially compromised, maybe even to the point of insolvency.

Forecasting your future tax liability is only the beginning; now is the time to plan to pay for it. Making the mistake of knowing your future tax liability and not planning for it is like knowing there is a hurricane on the horizon and sailing into it anyways. Who would have known it could be so turbulent?

One of the most cost-effective ways to fund the tax obligation set by an estate freeze is through corporate owned life insurance. Corporate owned life insurance has the special ability to fund the policy’s premiums fully or partially through a corporation’s retained earnings and is extremely malleable to each person’s situation. It can be incorporated around or with a trust, and even worked in with an existing life insurance policy.

Furthermore, in the event of a recession or an unanticipated downward revision in the value of the business after a freeze, you can take action with what is called a ‘re-freeze’ of your preferred shares, which resets the value of your preferred shares to your business’s current value.

To make an example of a refreeze, let’s go back to the case study above, but instead of your business growing from $10 million dollars to $15 million dollars, it goes down to $5 million dollars. With a refreeze of your estate, you reset the value of your preferred (frozen) shares to be worth $5 million, eliminating the tax obligation on the whole of that original $10 million valuation.

So, beyond death and taxes, add the range your future tax liability as something you’re certain about. Knowing what and how you’re going to pay your estate tax upon death will benefit you as well as your heirs present and future actions regarding your business. As the current global markets will show you, people act the most irrationally under uncertain conditions. Eliminate that uncertainty.

If you are interested in enacting an estate freeze, we are happy to work with you and your advisory team to ensure you maximize the benefits with insurance.



  • Shmoop Editorial Team. “Quotes – the Only Two Certainties in Life Are Death and Taxes.” Shmoop, Shmoop University, 11 Nov. 2008,
  • “You Will Die. Don’t Die without a Will.” You Will Die. Don’t Die without a Will. – The Targeted Strategies Group, 6 Mar. 2023,