Life Events: Death Taxes
Articles (Jump to FAQs)
Christopher Cline
The charitable remainder trust (CRT) is a mainstay of estate planning. Although designed for charitable giving, CRTs can play a role in financial planning for your stock grants.
Christopher Cline and Joshua Husbands
Restrictions can apply when you are funding a CRT with your company stock. These considerations dictate whether your strategy makes sense or is even possible.
Christopher Cline and Joshua Husbands
In this article we discuss the use of CRTs to diversify your company stock holdings, without immediate income tax liability, while you support an institution or cause you believe in.
Raymond Fazzi
Financial Advisor, 3/05
Financial advisors are telling clients not to expect estate tax to disappear. The drafting of wills and estate plans has changed in ways that are more subtle than dramatic. (Although not specific to stock compensation, this article is of interest to anyone with substantial net worth in company stock and options.)
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FAQs (Jump to articles)
Stock options that you hold when you die can be taxed twice...
Unvested options are not taxed or included in your estate. The value of any vested but unexercised stock options would be...
On the date of death, shares of publicly traded companies are generally...
When options are exercised, generally the estate or beneficiary is able to take an income tax deduction for the amount of estate taxes already paid by the estate. But when they are not exercised you cannot take the deduction against other income...
The spread at exercise is taxable to the estate or beneficiary at ordinary income tax rates...
Your estate or beneficiary must recognize capital gain equal to the difference between the sales price and the fair market value (FMV) of the stock...
When the estate or beneficiary exercises the option, it triggers ordinary income. Whether it is W-2 income and taxes are withheld, or whether it is 1099 income, depends on...
Under the tax code (IRC Section 691(a)(3)), the decedent's income now controlled by the recipient retains the same tax character that it would have had if...
Yes. Under the Internal Revenue Code, you must exercise an ISO within...
For estate-tax purposes, unexercised ISOs are treated...
The credit can't be transferred to...
The tax treatment of sales by your estate depends on whether you or the estate purchased the shares. Death is considered a qualifying disposition of the shares, regardless of how long you have held the shares. If you purchase the stock but die before its disposition, you have...
Typically, all or a
pro rata portion of any restricted stock vests at death. The value of restricted stock that vests and is payable at your death will...
The acceleration and vesting trigger ordinary income. Whether this is W-2 income and taxes are withheld, or whether it is 1099 income, depends on...
For federal income tax purposes, your estate or beneficiaries will receive a "step-up" in the tax basis of the shares to the market value of the stock at the time of death...
Assuming your stock plan allows this and it did not allow you to name a beneficiary, transferring unexercised vested options to a living trust would...
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