For many executives and employees of growing companies, a large, sometimes the largest, part of their compensation doesn’t arrive as salary. It comes as equity: stock options, restricted stock units, and similar awards. This kind of pay can build substantial wealth, but it’s governed by a tangle of rules that can quietly cost a fortune in unnecessary taxes if mishandled.

The forms matter, because each is taxed differently. Restricted stock units are generally taxed as ordinary income when they vest, whether or not you sell. Non-qualified stock options are taxed at exercise, on the spread between the strike price and the market value. Incentive stock options carry the potential for favorable tax treatment — but exercising them can trigger the alternative minimum tax, an unwelcome surprise for anyone who exercises a large position without planning for it. The timing of each decision, often within windows the employer controls, can dramatically change the tax bill.

There’s a risk dimension layered on top. Equity compensation tends to concentrate wealth in a single company, your employer, right alongside your paycheck and your career, so a downturn can hit several ways at once. Deciding when to exercise, when to sell, and how much to diversify is as much a risk question as a tax one.

And it all ties back to the broader plan: how equity compensation is timed, taxed, and diversified affects retirement, estate planning, and charitable giving alike.

Your attorney addresses how these holdings fit your estate documents; my role is to plan the exercise and sale timing, manage the alternative-minimum-tax exposure, and coordinate diversification with your overall plan. Helping people turn equity compensation into lasting, well-diversified wealth — without an avoidable tax hit — is the kind of work I do alongside your estate counsel.

Every family’s circumstances are different. To talk through how the ideas above apply to your own plan, contact Tony Atrasz.