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Wilfrid Laurier University Leaf
October 28, 2016
Canadian Excellence

Robert Mathieu


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Robert Mathieu

The deferral value of estate freezes (ABSTRACT)

Chu, L., Feltham, G., & Mathieu, R.

published: 2001 | Research publication | Refereed Journals - Accounting

Chu, L., Feltham, G., & Mathieu, R. (2001). "The deferral value of estate freezes". Canadian Tax Journal, 49 (2), 345-367.

ABSTRACT:  The deferral value of the estate freeze is examined. The value of the deferral of tax is modeled on future growth. From this model, the conditions that must be met if a freeze is to have value are determined. In general, if a freeze is to have a positive expected deferral value, the business must be expected to increase in value and the children must be expected to remain shareholders of the corporation longer than the parent would have been a shareholder in the absence of a freeze. The value of a freeze can either increase or decrease with an increase in the number of years during which the parent would retain control in the absence of a freeze. The implications of the analytic models for tax planning, including the optimal timing of a freeze, are discussed. It is advantageous if the parent performs the freeze at the earliest possible moment in which he can use his capital gains exemption in full.

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revised Jan 19/05

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