An estate freeze is an estate planning tool that can be used to avoid large taxes on the beneficiaries. It allows the estate owner to transfer assets without tax repercussions. Typically, the estate owner transfers the assets, common stock, to the company in exchange for preferred shares which are issues to the beneficiaries. The goal is to avoid the capital gains tax on the common stock. Often, this strategy is used by family members who have seen substantial growth in their stocks and foresee their beneficiaries being left with hefty tax bills. An estate freeze allows them to plan for this occurrence and avoid leaving their loved ones with capital gains taxes that can be financially devastating depending on the stock and amount of gain it has seen.