Estate Freeze Calculator

This calculator models an intentionally defective grantor trust (IDGT) freeze: you sell an appreciating asset to the trust for a promissory note at the AFR / Section 7520 rate, the asset grows inside the trust, and any appreciation above the note (principal plus interest) passes to your heirs without using any more of your lifetime gift/estate exemption. Expected Annual Growth is the strongest driver of Tax-Free Wealth to Heirs, since it compounds over Time Horizon (Years) through the same growthMultiplier formula that both scenarios share -- the freeze specifically captures whatever growth happens ABOVE the AFR, so a higher growth rate widens that gap directly. Current Asset Value dominates Required Seed Gift outright, since the seed gift is set to exactly 10% of the asset value with nothing else in that formula.

AFR / Section 7520 Rate sets the Break-Even Growth Rate one-for-one -- the code approximates the point where the freeze stops helping as equal to the AFR itself, since a note that costs more in interest than the asset actually grows leaves nothing for the trust to pass through tax-free. At the default $5,000,000 asset growing 7% a year for 15 years, the projected future value ($13.8M) stays under the $15 million 2026 exemption even without any freeze at all, so Estate Tax Savings and Estate Tax (No Freeze) both come out to $0 at these defaults -- the freeze strategy only shows a tax savings advantage once the unfrozen future value would exceed the remaining exemption. This model uses a simplified flat 40% estate tax rate and a fixed 10% seed gift; it doesn't model GRATs, valuation discounts for minority interests, or the trust's own income tax obligations.