What to do about concentrated stock before the liquidity event

Almost every meaningful planning technique available to a founder depends on one thing: acting while the outcome is still uncertain. Once a transaction is signed or an offering is filed, valuation discounts narrow, transfers attract scrutiny and the room to act shrinks to a handful of blunt instruments.

The first question is not which structure to use. It is how much of the position is genuinely surplus to the family's needs. We start with a simple floor: the capital required to fund the household's lifetime spending with a high degree of confidence, without any further contribution from the company. Everything above that floor is where planning should be concentrated.

From there the work becomes concrete. Qualified small business stock treatment should be confirmed at the entity level, not assumed. Gifting into an irrevocable trust ahead of a step-up in valuation moves future appreciation outside the taxable estate. Charitable intent, if it exists, is far cheaper to execute with appreciated shares than with cash after the fact. And a 10b5-1 plan, adopted well before any material non-public information exists, converts a series of judgement calls into a schedule.

None of this requires a view on where the share price is heading. That is the point. Good pre-liquidity planning is about widening the range of acceptable outcomes rather than betting on a single one.

The families who fare best are rarely the ones with the most sophisticated structures. They are the ones who started eighteen months earlier than they thought they needed to.