Background Note | HBS Case Collection | October 1992 (Revised August 2005)

Estate Freeze

by Henry B. Reiling

Abstract

The so called estate freeze is a classic estate planning and recapitalization practice. It seeks to reconcile the multiple human and business considerations associated with transferring operating control and the future increases in the value of a family dominated business from the retiring generation to the next generation of family management. The note describes the various objectives that need to be reconciled, the concept and mechanics of the practice, several areas of abuse that developed, the Treasury's overreaction to those abuses, and the current posture of the law and practice.

Keywords: Personal Finance; Governing Rules, Regulations, and Reforms; Laws and Statutes; Financial Services Industry; United States;

Citation:

Reiling, Henry B. "Estate Freeze." Harvard Business School Background Note 293-063, October 1992. (Revised August 2005.)