Most people think estate planning is about deciding who gets what. That's certainly part of it. But for larger estates, a more important question is often: How much of your wealth ultimately reaches your family versus getting lost to taxes along the way?
One strategy designed to address that question is commonly called Squeeze, Freeze, and Burn.
The name is funny, but it carries a lot of potential value. As with most good strategies, the sum is greater than its parts.
The Squeeze
The first objective is to squeeze more value through the available estate and gift tax exemptions.
Traditionally, we think of transferring assets based on what they're worth today. In practice, however, "what they're worth" is not always a simple or direct question to answer. Certain planning structures may allow assets to be valued at less than their otherwise perceived economic value for transfer tax purposes.
Put simply, if you can transfer $10 million of economic value while only using $8 million of exemption, you've created additional planning efficiency.
This is the "squeeze."
The Freeze
The second objective is to freeze (1) the value of your (2) taxable estate. This is one of the more complex parts of estate tax planning, and perhaps the part that's least understood among those who have yet to dive deep into the subject.
If you're trying to determine the extent of your estate tax exposure, it's best not to hyperfocus on the wealth you have today. One should consider the growth that may occur over the next 10, 20, 30, or 40 years.
A business owner may have a company worth $5 million today that is expected to become worth $20 million based on its growth rate. Real estate portfolios often appreciate substantially over time. An investment portfolio may compound for decades.
You may have noticed I divided "the value of your taxable estate" into two parts. It's somewhat easier to overlook that what qualifies as your 'taxable estate" is also a moving target. For one, estate tax thresholds have had a history of changing over time, and it's very hard (likely impossible) to predict what those thresholds will be when they apply to you. Secondly, some states tax estates at far lower than federal threshold levels.
The freeze seeks to move future appreciation outside of the taxable estate, in consideration of the fact that appreciation can be substantial and the taxable estate bar can move over time.
The Burn
The final piece is the burn. At first glance, it sounds destructive. It's actually the opposite.
The idea is to intentionally reduce the size of the taxable estate over time, often by paying costs that otherwise would have been charged against assets already moved outside the estate.
Think of it this way: if dollars are eventually going to leave your estate anyway, it can be more efficient for them to be used deliberately rather than remain exposed to future estate taxation.
The taxable estate slowly "burns down" while transferred assets continue growing for heirs.
Of course, this is best done with planned backstops that won't leave you out of luck after "burning" your still-taxable estate during your lifetime.
Why the Combination Matters
Individually, each step provides some benefit.
Together, they address three different dimensions of the same problem:
- Squeeze: Transfer more wealth than may initially appear possible.
- Freeze: Keep future growth from increasing the taxable estate.
- Burn: Gradually reduce what's left behind (in the taxable estate) while preserving the out-of-estate wealth.
It's similar to engineering anything critical; one layer of protection helps but is insufficient. Multiple layers operating together create resilience and reliability.
Zooming out, estate planning, like most planning, is rarely about minimizing taxes for the sake of minimizing taxes. Taxes are a form of friction. The objective is preserving flexibility, family continuity, and the ability for wealth to accomplish what it was intended to accomplish in the first place.
Of course, these strategies are complex, involve tradeoffs, and are not appropriate for every family. The details matter a lot.
To implement such a strategy, you'll need to coordinate with your wealth, tax, insurance, and legal advisors.
But the underlying concept is surprisingly straightforward: transfer more, cap future growth, and shrink the part that remains taxable.
2026-9158168.1 Exp 10/2028