Let’s take a look at how taxes play a role in the most common wealth transfer strategies, as well as what steps you can take now to incorporate your equity compensation into your estate plan.
If your employer provides equity compensation as a part of its benefits package, you can expect to receive a wealth of information about the program. If you’re new to the subject, the amount of information and the details can be daunting, especially if you’re not yet familiar with the basics. To help with that, let’s take a step back and view the big picture on equity compensation.
Concentration risk is an issue of interest to nearly every employee, executive, business owner, or anyone else holding company stock and employee stock options. What is concentration risk? It’s loosely defined as holding a significant portion of wealth in a single stock, which could result in an inappropriately diversified portfolio. Unfortunately, the ambiguity associated
A performance award is a grant of company stock or stock units, typically tied to a pre-determined metric or goal that is specific to the recipient or award itself. More often than not, the recipient is an executive. Interchangeably referred
If you’re an executive or an employee with significant equity in your company from employee stock options, restricted stock units, or other stock grants, you may have a continual need to sell stock. However, SEC regulations, company insider trading policies and fears of allegations of insider trading may prevent proper diversification of holdings. Fortunately for executives and insiders, Rule 10b5-1 trading plans can allow flexibility to sell stock without regard to limitations imposed by company insider trading policies while complying with SEC regulations. Such plans also provide an affirmative defense to allegations of insider trading.
If you’re wondering how to maximize the value of your incentive stock options (ISOs), non-qualified stock options (NQSOs), restricted stock units (RSUs), or other forms of equity compensation, you’re not alone. After all, there is plenty to think about if you’ve been granted equity compensation. You may dream of how to strike it rich. You may fear you’ll do something wrong and miss out. You might become mired in taxing technicalities, including AMT calculations. All that thinking can backfire if “TMI” (too much information) prevents you from proceeding.
To achieve this win-win ideal, it’s important to be deliberate about which equity compensation share lots you donate, as well as whether you donate them as post-sale cash proceeds, or unsold shares. We concluded that cash isn’t necessarily king when donating to a DAF. Directly donating low basis, long-term shares usually reigns supreme.
Being part of an initial public offering, or IPO, is an exciting time. This is when a private company goes through the process of getting listed on a publicly-traded exchange. Where shareholders may have previously only been able to buy or sell the company’s equity in private deals (if allowed by the company), an IPO allows for company stock to be bought, sold, or traded…
Restricted stock units and employee stock options are commonly-awarded types of equity compensation that you may receive as part of your overall pay from your employer. While both restricted stock units and stock options are forms of equity, they each have particular features and are treated very differently from a tax perspective. Restricted stock units or awards (RSUs) typically…
If you are on the receiving end of an equity compensation award, you may be overwhelmed by the amount of new information, jargon, and rules coming your way. You might also feel uncertain about how new.
Whether you’re just getting started or expanding your knowledge, here are some resources to get you started.
Understand what you have, what you should consider, and what ultimately matters to you.
I write about equity compensation and employee stock options in a way that is easy to understand.
Understand what you have, what you should consider, and what ultimately matters to you.
Get the Ultimate Guide to Incentive Stock Options to better understand your equity compensation.
