An estate freeze minimizes estate taxes by creating two classes of stock,preferred and nonvoting common stock,and only allowing the preferred stock,which the owner holds,to appreciate.

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An estate freeze is a legitimate tax planning tool that allows individuals to freeze the value of their estate by transferring ownership of their business or assets to another party, typically an irrevocable trust. The preferred stock represents the ownership interest in the underlying assets, while the nonvoting common stock represents a passive investment with limited voting rights. By retaining ownership of the preferred stock, the owner can control the business while ensuring that the appreciation in value is not subject to estate tax. Thus, an estate freeze is an effective way to pass down a business or assets to the next generation while minimizing future tax liabilities.

An Estate Freeze Minimizes Estate Taxes by Creating Two Classes