The corporate reorganization is usually performed as part of an estate freeze.
- First, the estate freeze is a transaction in which you lock in or "freeze" the current value of corporate shares by transferring to other taxpayers (children, grandchildren, or key employees) the future increase in value of the shares that the initiator of the freeze (the transferor) owns. The transferor retains the current value of his/her shares and defers the capital gains tax payable on such shares to the time of their actual or deemed disposition;
- Secondly, the goal of an estate freeze is to facilitate the integration of a succession within the business. This succession can perhaps be a family member or a key employee who can be integrated to the corporation's business through its shareholding.