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Life Events › Death Taxes

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Articles

Gifts: Save On Estate Taxes With Transferable Stock Options This is premium content

Susan Daley
After you die, taxes may be owed on the value of your property. One pillar of estate planning is to transfer assets that are likely to appreciate in value, such as stock options, out of your control long before you die.

Charitable Remainder Trusts (CRTs) And Your Company Stock (Part 1) This is premium content

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.

Charitable Remainder Trusts (CRTs) And Your Company Stock (Part 2) This is premium content

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.
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Charitable Remainder Trusts (CRTs) And Your Company Stock (Part 3) This is premium content

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.

FAQs

After my death, at what times might my stock options be taxed?

Stock options that you hold when you die can be taxed twice...

Upon my death, the vesting of my restricted stock would accelerate. How would the value be taxed as part of my estate? This is premium content

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...

How would my stock options be valued and taxed for estate-tax purposes upon my death? This is premium content

Unvested options are not taxed or included in your estate. The value of any vested but unexercised stock options would be...
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How are shares of company stock that I received from prior option exercises or restricted stock vesting valued for federal estate-tax purposes after my death? Is there a step-up in the basis of the stock? This is premium content

On the date of death, shares of publicly traded companies are generally given the...

What are the federal income tax consequences if my estate or beneficiary sells stock that I received from a prior option exercise or from restricted stock vesting? This is premium content

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...

When someone dies with a restricted stock grant, do tax withholding and reporting apply if the vesting is accelerated or allowed to continue? This is premium content

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...

What is the tax treatment of ESPP shares at death? This is premium content

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...

At death, the value of options is included in the gross estate for estate tax purposes. But what happens if the stock's value drops below the exercise price and the options expire unexercised? This is premium content

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...

What are the federal income tax consequences if my estate or beneficiary exercises nonqualified stock options (NQSOs) after my death? This is premium content

The spread at exercise is taxable to the estate or beneficiary at ordinary income tax rates...

What are the federal income tax consequences if my estate or beneficiary sells the NQSO stock it has exercised and held? This is premium content

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...

Do tax withholding and reporting apply to NQSOs exercised by the estate or beneficiary? This is premium content

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...

How does IRD or "income in respect of a decedent" apply to stock options and other stock grants? This is premium content

IRD, as it applies to stock compensation, is income on which a decedent would have...

When I am no longer with my company (e.g. because of job loss, disability, or death), do statutory deadlines dictate when I must exercise an ISO? This is premium content

Yes. Under the Internal Revenue Code, you must exercise an ISO within...

What is the tax treatment of ISOs after death? This is premium content

For estate-tax purposes, unexercised incentive stock options (ISOs) are treated like NQSOs. But ISOs receive more favorable tax treatment at exercise than NQSOs do. Your heirs or estate get...

What would happen to my AMT credit at death, or to an AMT credit created by my estate? This is premium content

Some experts take the position that an AMT credit transfer, at least in a community property state...

Why would I transfer stock options to a living trust? What is the tax impact? This is premium content

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...