Financial Planning After a Liquidity Event: The First 90 Days

For founders, executives, and inheritors who just crossed $30M. Not tax or investment advice — your specific situation requires qualified counsel.

The 90 days after a major liquidity event are the highest-stakes financial planning window most people ever face. Decisions made (or not made) in this window can shift wealth to heirs by $5–30M. They are also largely irreversible.

This guide covers the critical decisions, in rough priority order.

Your tax stack: what's hitting you

On a $50M company sale where you receive cash at close, the federal tax layer looks roughly like this for a married couple in 2026:

• Long-term capital gains: 20% federal rate on amounts held >12 months (assumes qualified holding period). This is the base rate for most founder stock.
• Net Investment Income Tax (NIIT): 3.8% surcharge on net investment income under IRC § 1411, applies above $250K MAGI (married). Combined federal rate: 23.8% on LTCG.
• State capital gains: Varies widely. California taxes gains as ordinary income (up to 13.3%). Texas and Florida have no state income tax. If you relocated before close, residency timing is critical and contested.
• AMT (if ISOs are involved): Incentive stock option spread at exercise creates an AMT preference item. For large ISO portfolios, this can generate a 6–7 figure AMT liability in the exercise year — separate from the gain at sale.

On a $50M gain in California with no planning: federal + state can approach 37% combined. The gap between planned and unplanned outcomes is measured in millions.

QSBS: the single largest lever for founder stock

If your stock qualifies under IRC § 1202 (Qualified Small Business Stock), the federal exclusion is the largest single tax lever available to a founder. Post-OBBBA (July 2025), the exclusion is up to $15M per issuer per taxpayer, up from the prior $10M limit.¹

QSBS qualification checklist:

• Original-issuance C-corp stock (not converted from LLC, not secondary-market purchases).
• Company had aggregate gross assets of $50M or less at time of issuance and immediately after.
• You held the stock for more than 5 years.
• The company was an active trade or business in a qualifying industry (professional services — law, finance, health, consulting — are excluded by statute).
• You acquired the stock in exchange for money, property, or services (not in a secondary transaction).

If you qualify: the first $15M of gain is federally tax-free. On a $50M exit with $1M basis, that's potentially $2.8M+ of avoided federal tax on the excluded slice alone.

If you don't fully qualify or have gain above $15M, look at IRC § 1045 rollover: if the company sale doesn't trigger QSBS (e.g., holding period not yet 5 years), you can roll proceeds into new QSBS stock within 60 days and restart the clock — preserving the exclusion potential for a future exit.²

The QSBS stack: Married couples can sometimes double the exclusion ($15M per spouse) if shares were held separately. If children or trusts hold shares, each qualifying holder may claim their own exclusion. This is advanced territory — one of the clearest cases where specialist legal counsel pays for itself immediately.

Installment sales and IRC § 453

If the deal structure allows it — earnouts, seller financing, or a structured note from the buyer — an installment sale under IRC § 453 lets you spread capital gain recognition across multiple tax years. Each payment triggers gain recognition proportional to the gross profit percentage.³

When this helps:

• You're in a high-income year from other sources (significant ordinary income, RSU vesting, etc.) and want to defer recognition into lower-income years.
• State income tax rates are high today but may decrease (e.g., you're relocating to a no-income-tax state next year).
• You can earn a meaningful return on the deferred tax dollars in the interim (the "tax deferral as interest-free loan" argument).

When it doesn't help — or hurts:

• The buyer is a public company paying in stock: IRC § 453(k) disallows installment treatment for "readily tradeable" debt instruments.
• You have large QSBS exclusion available — you may want to recognize and exclude as much gain as possible in one year rather than deferring.
• Credit risk on the note: if the buyer defaults, you still owe tax on recognized gain but have nothing to show for it.

Donor-Advised Fund contribution before close

If you have philanthropic intent of any scale, a Donor-Advised Fund contribution of appreciated shares before the sale closes is one of the highest-leverage charitable planning moves available.

How it works: You contribute company shares (pre-cash, pre-close) to a DAF. The DAF sells them. You receive a charitable deduction for the fair market value of shares contributed, and neither you nor the DAF pays capital gains tax on the appreciation. The DAF then grants the proceeds to charities you designate, on your own timeline.

The numbers matter: On $5M of company shares with near-zero basis, contributing pre-close vs. writing a check post-close saves approximately $1.19M in federal capital gains tax (23.8% on $5M), while you still effectively direct the full $5M to charity. The check route nets charities $3.81M; the DAF route nets charities $5M. Same philanthropic intent, significantly different math.

Timing constraint: The contribution must be completed before the sale closes. Once a "definitive agreement" is in place, the IRS views the gain as "practically certain to close" and may deny the exclusion. Work with counsel before signing the purchase agreement.

Private foundation vs. DAF: A private foundation gives you more control (own investments, family governance, named programs) but requires 5% annual payout, compliance overhead (~$25–50K/year in legal and accounting), and involves more IRS scrutiny. DAFs are simpler, cheaper, and often faster. At $1–20M in charitable assets, DAFs win on economics. Above $20–30M with multigenerational family involvement, a private foundation may be worth it. See our main guide for the UHNW wealth management framework.

Estate planning timing: the window right after a liquidity event

The first 6–12 months after a liquidity event are prime time for estate planning moves that require you to have money but not yet have spent it. Several key reasons:

The $15M exemption is permanent — but use it while it's yours. The OBBBA (July 2025) made the $15M per-person federal estate/gift/GST exemption permanent ($30M per married couple).¹ Previously it was scheduled to sunset back to ~$7M in 2026 — that risk is gone. But the exemption is still personal — it dies with you, it doesn't compound for heirs. Large gifts now lock in tax-free transfer of appreciation at the recipient's basis going forward.

Spousal Lifetime Access Trust (SLAT): You can gift up to your full exemption to an irrevocable trust that benefits your spouse (and descendants). The assets leave your taxable estate while your spouse retains access. Appreciation from the gift date forward is permanently outside your estate.

GRAT (Grantor Retained Annuity Trust): Fund a trust, take back an annuity stream, and anything above the IRS hurdle rate (7520 rate) passes to heirs gift-tax-free. Rolling GRATs — short-duration, near-zero-remainder structures — are the standard UHNW planning tool for transferring significant appreciation with minimal gift tax risk.

Basis step-up consideration: Assets held until death get a basis step-up to fair market value under IRC § 1014. This means IRAs and retirement accounts (no step-up, taxed as ordinary income at withdrawal) should generally stay inside the estate and be depleted first, while highly-appreciated non-retirement assets are candidates for gifting or trust strategies.

Allocation: from concentrated illiquid to diversified

At exit, most founders move from one concentrated, illiquid position (100% of net worth in company stock) to a concentrated liquid position (100% of net worth in cash). The question isn't whether to diversify — it's how and at what pace.

Immediate priorities (first 90 days):

• Liquidity buffer: 1–2 years of living expenses in money market or short-term treasuries. You'll be making complex decisions; you don't want short-term cash pressure affecting long-term choices.
• Tax reserve: Estimate your total 2026 tax liability (federal + state), park that amount in T-bills. This is not investable capital until the April 2027 check clears.
• No major long-term commitments in 90 days: Resist the pull toward private fund commitments, real estate acquisitions, and new ventures until the estate and tax planning is structured. Private fund capital calls are 3–5-year instruments; get the structure right first.

Long-term target allocation ($30–100M):

• Public equities: 40–60%, increasingly via direct indexing SMA for tax-loss harvesting at scale (minimum typically $1–5M per account). Direct indexing lets you hold individual stocks rather than funds, harvesting losses against specific positions rather than fund-level distributions.
• Fixed income: 10–20%, ladder of individual bonds or treasuries preferred over funds at UHNW scale for tax control.
• Private markets (PE, VC, private credit, real assets): 20–40% over time. Access quality — top-decile GPs vs. open-ended fund-of-funds — drives most of the return differential. This takes years to build out via commitments.
• Alternatives (hedge, macro, real estate): 0–20%, case-dependent.

The central question: MFO vs. fee-only RIA

If you just received $30–100M from a sale, you'll hear from multi-family offices, wirehouses, and fee-only RIAs. Here's how to think about it:

What to watch for from wirehouses: Major wirehouses (Morgan Stanley, Goldman, Merrill, UBS Private Wealth) have the brand and sophisticated products, but they are structurally conflicted — advisors are incentivized to sell in-house products and to keep AUM in managed accounts rather than direct holdings. A $50M client at a wirehouse is profitable; at a fee-only firm, it's a major relationship. The attention differential is real.

The decision framework:

• Under $30M: fee-only RIA. MFO overhead isn't justified.
• $30–80M: fee-only RIA with strong coordination capability, or boutique MFO. Get quotes from both and compare total cost including all embedded fees.
• $80–250M: MFO is competitive; evaluate by track record on alternative investment access and estate planning outcome, not just investment performance.
• Above $250M: single-family office becomes economically viable; the question is whether you want to be in the family-office management business.

Common mistakes in the first year

• Moving to cash and waiting. The "I'll figure it out after taxes" pause often stretches to 2 years. Meanwhile, the estate planning window from the liquidity event narrows and private fund vintages pass. Urgency is warranted — at least on the planning side.
• Not verifying QSBS before relying on it. QSBS qualification depends on facts at time of issuance, not close. If the company had over $50M in gross assets when you got your stock, it doesn't qualify regardless of what anyone assumed. Confirm with counsel before filing.
• Assuming your CPA handles this. Business CPAs know tax return preparation. UHNW estate planning, QSBS strategy, trust structures, and family office decisions are different specializations. Your existing CPA may not have UHNW planning experience; most don't.
• Committing private fund capital before the estate plan is set. LP interests committed in your personal name are in your taxable estate. The same commitment from within an irrevocable trust can be outside the estate. Two-year fund lifecycles mean this matters.
• Choosing an advisor on investment returns alone. At $50M, the gap between excellent and average investment management is ~0.5–1% per year = $250–500K. The gap between excellent and average estate planning in one year can be $3–15M. Optimize for planning competency, not portfolio performance.

Sources

1. IRS — One Big Beautiful Bill Act (July 2025): estate/gift/GST exemption permanently set at $15M per individual, indexed from 2027. QSBS exclusion under IRC § 1202 raised to $15M per issuer.
2. IRC § 1045 — Rollover of Gain from Qualified Small Business Stock to Another Qualified Small Business Stock.
3. IRC § 453 — Installment Method (income from an installment sale).
4. IRC § 1202 — Partial exclusion for gain from certain small business stock. 5-year holding, original issuance, C-corp, ≤$50M aggregate gross assets at issuance.
5. IRS Publication 537 — Installment Sales: rules, calculations, and dealer restrictions.

Tax law changes materially and frequently. Verify all figures and thresholds for the current tax year with qualified tax counsel before acting. OBBBA guidance is still being issued; some provisions have pending regulatory clarification.