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“Estate freeze” is a term that’s so commonly tossed around in the estate planning community that it’s actually become fairly useless shorthand, as it can be used to describe such a wide variety of techniques. However, as discussed by Jeffrey N. Pennell in his presentation Tuesday at the Heckerling Institute on Estate Planning, all freezes are united by a common theme—the use of “cold” assets to insulate “hot” ones.

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Cash, for example is a reliably cold asset, but is not necessarily always the coldest. For instance, currently Pennel believes that the unified exemption is colder than cash, though that may be subject to change. On the other side of the coin, it’s tempting to think of “hot” assets as securities or real estate holdings, however, if for example, our current transfer taxation regime were to be replaced by a carryover basis system similar to that in Canada (one of the possibilities that’s been floated), then all of a sudden life insurance premiums become an amazingly “hot” asset because you’d effectively be able to avoid all tax on the build up of value and would want to put off converting that appreciation into ordinary income for as long as possible.

Source: How Cold Assets Can Help Keep Others Hot