Succession Planning and Estate Freeze Services
Succession planning is an essential process for businesses, particularly family-owned enterprises, to ensure continuity, protect wealth, and minimize tax liabilities. At Kalfa Law we help business owners in the Greater Toronto Area (GTA) strategically plan the transfer of ownership and control to the next generation while safeguarding their estate’s value.
One of the most common strategies we use is a Section 86 estate freeze, which allows business owners to “freeze” the current value of their assets while transferring future growth to heirs or other beneficiaries.
What is a Section 86 Estate Freeze?
A Section 86 estate freeze under the Canadian Income Tax Act involves exchanging common shares or other appreciating assets for preferred shares or fixed-value assets. This effectively locks in the current value of your estate, so future growth or appreciation is transferred to your successors.
How it works:
- The individual exchanges their common shares for preferred shares with a fixed value tied to the current fair market value of the corporation at that date. This means all prior value accrued to the date of the freeze is ‘frozen’ and allocated to the current shareholder(s).
- Any future increase in value or profits from the business or assets accrues to the next generation or designated beneficiaries who receive fresh common shares from the treasury of the corporation
- The preferred shares held by the original owner remain fixed in value, reducing exposure to future capital gains tax since these shares no longer appreciate.
Key Benefits of Succession Planning and Estate Freezes
1. Preservation of Wealth
By freezing the value of your estate, you minimize the impact of estate taxes and capital gains on appreciated assets because those shares no longer increase in value. This ensures that your wealth is preserved for future generations while providing flexibility in financial and tax planning. As every Canadian will pay a capital gain on their death due to the deemed disposition of all taxable capital property, the pref shares allow for ideal planning to cover over the eventual tax liability which is now a fixed amount rather than a sum that continues to accrue and enlarge over time.
2. Smooth Ownership Transfer
An estate freeze facilitates the orderly transfer of ownership and control to your heirs, allowing continuity and stability in the business. Without a freeze, the new generation would need to purchase shares at fair market value, which can be financially burdensome. A freeze allows shares to be issued to the new generation for no buy-in amount.
3. Strategic Succession Planning
Effective succession planning is more than filling positions, it involves preparing and mentoring future leaders to take over seamlessly, reducing business disruption and maximizing long-term success.
Related Services:
- Amalgamations, Amendments, and Dissolutions
- Employee Stock Option and Incentive Plans
- Corporate Tax Planning
Why Choose Kalfa Law Firm for Succession Planning in the GTA?
Our experienced business and estate lawyers guide family businesses and private corporations through complex succession and estate planning processes. We provide tailored strategies that:
- Protect your assets from unnecessary tax burdens
- Ensure continuity of business operations
- Facilitate a smooth generational transition
We serve clients across Toronto, York, Durham, Peel, Halton, and other GTA regions, providing professional advice on estate freezes, Section 86 rollovers, and business succession strategies.
Get Expert Succession Planning Advice
Protect your legacy and ensure a smooth generational transition with professional guidance from Kalfa Law Firm. Our lawyers specialize in succession planning, estate freezes, and Section 86 rollovers for businesses across the GTA.
Contact us today to schedule a consultation and safeguard your business for the future.
