Executive Planning
Your compensation is complex. Your plan should match.
Stock options, restricted stock, deferred compensation, and change-in-control agreements create planning opportunities and tax traps that standard estate plans completely miss. We design strategies built specifically for the compensation structures and liability exposures that come with the corner office.
The Challenge
Executive compensation creates estate planning blind spots
Most estate planning attorneys treat executive compensation as an afterthought, something to be listed on a financial statement and passed through a revocable trust. This approach fails to capture the enormous planning opportunities embedded in your compensation, and worse, it ignores the unique risks that executive-level wealth creates.
A single poorly timed stock option exercise can trigger hundreds of thousands in avoidable taxes. An overlooked deferred compensation account can subject your beneficiaries to a combined effective tax rate exceeding 70%. A change-in-control payment structured without regard for Section 280G can lose 20% of its value to excise taxes on top of ordinary income taxes.
These are not theoretical risks. They are predictable consequences of failing to integrate executive compensation into a comprehensive estate plan.
Our Approach
Integrated planning across every component
We begin by mapping every element of your compensation: base salary, annual bonus, stock options (ISOs and NQSOs), restricted stock and RSUs, deferred compensation accounts, supplemental executive retirement plans (SERPs), and change-in-control provisions. Each element has distinct tax treatment, timing constraints, and planning implications.
From there, we design an integrated strategy that coordinates the exercise timing of stock options, the vesting schedule of restricted stock, the distribution elections for deferred compensation, and the structure of your estate plan to minimize combined income, estate, and gift taxes across your lifetime and at death.
This is not work that can be done in isolation. We collaborate directly with your financial advisor, CPA, and corporate benefits team to ensure that every decision is aligned and every opportunity is captured.
Key Focus Areas
Strategies for Executive Compensation
Stock Option Planning
Incentive stock options (ISOs) and non-qualified stock options (NQSOs) create distinct planning challenges. ISOs offer favorable capital gains treatment but trigger alternative minimum tax (AMT) on exercise. NQSOs are taxed as ordinary income at exercise, creating a large taxable event that must be coordinated with your overall tax plan. We structure the timing of exercises, coordinate with charitable vehicles like donor-advised funds or CRTs to offset gains, and implement trusts to hold exercised shares so that future appreciation occurs outside your estate. For executives approaching retirement or a liquidity event, the sequencing of option exercises across tax years can save hundreds of thousands in combined income and estate taxes.
Restricted Stock & RSU Strategies
Restricted stock units vest on a predetermined schedule and are taxed as ordinary income at vesting. Because you cannot transfer RSUs before they vest, the planning window is narrow but critical. Section 83(b) elections on restricted stock (not RSUs) allow you to pay income tax on the grant-date value rather than the higher vesting-date value, locking in a lower tax basis. Post-vesting, we implement strategies to transfer appreciated shares into irrevocable trusts, GRATs, or charitable vehicles to remove future growth from your taxable estate. For executives with large concentrated positions, we also design diversification strategies that balance tax efficiency with investment risk management.
Deferred Compensation Planning
Non-qualified deferred compensation (NQDC) plans under IRC Section 409A allow executives to defer salary, bonuses, and other compensation to future years. While this provides income tax deferral, deferred compensation presents unique estate planning risks: the full value of your NQDC account is included in your taxable estate, it represents an unsecured promise to pay from your employer (making it subject to the company's creditors), and distributions are subject to strict timing rules that cannot be modified without severe tax penalties. We coordinate NQDC distribution elections with your retirement timeline, design trust structures to manage the estate tax impact, and evaluate the credit risk of relying on your employer's ongoing solvency.
Golden Parachute Structuring
Change-in-control agreements and severance packages for senior executives often trigger IRC Section 280G, which imposes a 20% excise tax on "excess parachute payments", generally payments that exceed three times the executive's base amount. This excise tax is in addition to ordinary income tax, creating a combined effective rate that can exceed 60%. We review and negotiate change-in-control provisions before they are finalized, structure payments to fall below the 280G threshold where possible, and implement modified cap provisions or gross-up alternatives that optimize the after-tax value of your severance arrangement. For executives in active M&A situations, timing is critical.
Executive Liability Protection
Corporate officers and directors face personal liability exposure that most estate plans ignore. D&O insurance provides a layer of protection, but policies have exclusions for fraud, willful misconduct, and SEC enforcement actions. Indemnification agreements with your company are only as strong as the company's solvency. We build personal asset protection structures, separate from your corporate protections, that shield your personal wealth from claims arising from your fiduciary duties. This includes irrevocable trusts, entity structuring for personal assets, and coordination with your D&O coverage to eliminate gaps. For executives serving on multiple boards, we also address the compounding exposure that comes with each additional fiduciary role.
Frequently Asked Questions
Executive Planning Questions
How should I plan around stock options?
The planning begins well before you exercise. For ISOs, you need to model the AMT impact of exercise and determine the optimal number of shares to exercise in each tax year to minimize the AMT hit. For NQSOs, the ordinary income recognized at exercise should be coordinated with other income sources and potentially offset through charitable contributions, donor-advised fund contributions, or other deduction strategies. After exercise, the shares should be evaluated for transfer to irrevocable trusts or GRATs to remove future appreciation from your estate. If you hold a concentrated position, we also design a systematic diversification strategy that balances tax efficiency with prudent risk management. The worst outcome is making exercise and holding decisions in isolation without considering the estate planning, income tax, and investment implications together.
What happens to deferred compensation in my estate?
The full value of your non-qualified deferred compensation account is included in your gross estate for estate tax purposes, even though the funds have not yet been distributed to you. Upon your death, the account will be distributed to your designated beneficiary according to the plan terms, and the beneficiary will owe income tax on the distributions just as you would have. This creates a potential double taxation situation: estate tax on the full account value, plus income tax as distributions are received by your beneficiary. The combined effective tax rate can exceed 70%. Proper planning may include using life insurance in an ILIT to offset the tax burden, coordinating distribution elections to minimize the estate value at death, or designating a charitable beneficiary for the deferred compensation (which generates both an estate tax deduction and avoids the income tax) while directing other assets to your family.
Am I personally liable as a corporate officer?
Yes, in ways that many executives underestimate. Corporate officers owe fiduciary duties of care and loyalty to the company and its shareholders. Breaches of these duties can result in personal liability. The business judgment rule provides protection for good-faith decisions, but it does not shield officers from claims of gross negligence, self-dealing, or failure of oversight. Additionally, officers can face personal liability under securities laws for material misstatements, under employment laws for wage and hour violations, under environmental statutes, and under the responsible person doctrine for unpaid trust fund taxes. D&O insurance covers many of these risks, but policies universally exclude intentional misconduct and often have sub-limits or exclusions for regulatory proceedings and SEC enforcement actions. Personal asset protection planning provides a separate layer of defense that does not depend on corporate indemnification or insurance coverage.
How do golden parachutes affect estate planning?
Golden parachute payments affect estate planning in two primary ways. First, the tax impact: Section 280G can impose a 20% excise tax on payments exceeding three times your base amount, on top of ordinary income taxes. This dramatically reduces the after-tax value of the payment and, consequently, the wealth available for estate planning. Second, the timing: a change-in-control event often creates a large, one-time influx of cash that needs to be deployed efficiently. This is an ideal opportunity to fund irrevocable trusts, make large gifts under the current exemption, or establish GRATs with the appreciated stock component of the package. We work with executives during the negotiation phase of their employment agreements to structure change-in-control provisions that minimize the 280G exposure, and then design an estate planning strategy that deploys the proceeds as tax-efficiently as possible.
What special risks do executives face?
Executives face a constellation of risks that standard estate plans do not address. These include: personal liability from fiduciary duties owed to shareholders and the board; regulatory exposure from SEC, DOJ, and state attorney general investigations; employment-related claims from subordinates; concentrated stock positions that create both investment risk and estate tax exposure; complex compensation structures (options, RSUs, deferred comp, supplemental executive retirement plans) that interact in ways most advisors do not fully understand; and public visibility that makes them attractive targets for litigation. Beyond these professional risks, executives often have complex personal situations including multiple residences, business interests, family dynamics, and philanthropic commitments that require sophisticated, coordinated planning. A generic estate plan built around a revocable trust and a pour-over will is wholly insufficient for this risk profile.
Your compensation package deserves a plan built to match.
Schedule a confidential consultation to review your equity compensation, deferred accounts, and executive agreements. We will identify the opportunities your current plan is missing and the risks it is not addressing.