Lock-up expiration planning should start about 90 days before the date, because the work that matters takes weeks and the decisions are better made while you cannot act on them. In order: confirm exactly what you own, model the tax, decide what percentage you will keep, set a written sale schedule, and put the execution mechanism in place.
Days 90 to 75: establish the facts
Pull an accurate inventory of every share and every award. That means share counts by type, grant dates, exercise dates, exercise prices, vesting schedules, and cost basis for each lot, from the equity administration system rather than from memory.
Confirm your actual first eligible sale date. Read your own lock-up agreement for staggered releases, early release triggers, and permitted transfers, and confirm your company’s blackout calendar and pre-clearance process.
Determine whether you are an affiliate for securities law purposes, since that status brings volume limits and filing requirements to every sale and is not always obvious from a job title.
Days 75 to 60: model the tax
Build the projection at several price levels rather than one. For each level, calculate the federal capital gain, the net investment income surtax, state tax, and any ordinary income from vesting restricted stock units or option exercises during the period.
Pay particular attention to alternative minimum tax if you exercised incentive options, and to any shares approaching a holding period threshold where waiting weeks changes the rate materially.
Then set the reserve. The tax number should be quantified now and held in cash or short-term instruments as sales occur, not estimated afterward, using the approach in the windfall cash management guide.
Days 60 to 45: decide the target position
- What percentage of your net worth are you willing to leave in one stock, stated as a number?
- What would a fifty percent decline in that position do to your plan?
- What are the near-term uses of the proceeds: housing, reserves, charitable commitments?
- What do you want the long-term portfolio to look like, and who is managing it?
Answer these in writing before the date. The value of the exercise is that your answers are recorded while the price cannot influence them, which is the bias described in the article on how insiders misjudge their own stock.
Days 45 to 30: set the schedule and the mechanism
Convert the target into dates and quantities: how many shares, on what dates, from which lots. Include what you will do if the stock rises sharply and, more importantly, what you will do if it falls sharply, since that is the scenario in which plans get abandoned.
If you are subject to blackout windows or hold material non-public information regularly, adopt a trading plan now. Cooling-off requirements mean a plan adopted late cannot execute early, which is why this step belongs well before expiration and not after.
Confirm the mechanics with your broker: lot identification method, whether they will honor specific identification, wire instructions, and any pre-clearance workflow your company requires. The choice of where the shares sit is itself worth reviewing, as the article on equity award accounts versus your advisor discusses.
Days 30 to 0: assemble the team and the paperwork
Make sure the people who need to coordinate actually have. Your tax advisor should have the projection, your advisor should have the schedule, and your company’s legal or stock administration team should have any required filings queued.
Complete any estate planning transfers permitted under your agreement. Gifting shares at a lower valuation is a transfer opportunity that shrinks as the price rises, and it becomes considerably harder once the position is liquid and your intentions are formed.
Finally, do nothing new in the last two weeks. Late changes made under the influence of the current price are the most reliable source of regret in this entire process, and the discipline of holding to a written schedule is the same one described in the staged selling framework.
After expiration
Execute the schedule, fund the tax reserve as sales settle, and resist renegotiating. Review the whole position at a scheduled interval rather than continuously, folding it into the same annual pass you run on the rest of the balance sheet.
If your circumstances genuinely change, revise the plan deliberately and in writing. What you want to avoid is a schedule that erodes one decision at a time.
Expect the first quarter after expiration to be noisier than you planned for. Estimated tax payments come due on a schedule that may not match your sale dates, brokerage settlement adds days you did not budget, and pre-clearance requests can be denied for reasons nobody explains. None of that is a reason to change the schedule; it is a reason to have built slack into it.
The bottom line on the countdown
Start 90 days out. Establish exact share and lot data, model tax at multiple prices, decide the percentage you will keep, write a dated sale schedule, and put the execution mechanism in place well before the date. Every one of those steps is easier before the shares are liquid.
When should I start planning for lock-up expiration?
About 90 days before the date. Share and lot data takes time to assemble, tax modeling takes longer than expected, and trading plan cooling-off requirements mean the execution mechanism has to be in place well in advance.
What is the single most important step?
Deciding in writing what percentage of your net worth you will leave in company stock, before the date. Every other decision follows from that number, and it is far harder to set once the shares are liquid.
Do I need a trading plan?
If you face narrow trading windows or have regular access to material non-public information, usually yes. Even without those constraints, a plan enforces the schedule against the temptation to renegotiate on price.
Should I make gifts before or after expiration?
Frequently before, if your lock-up agreement permits transfers, since gifting at a lower valuation transfers more value for the same gift tax cost. Confirm your agreement’s permitted transfer provisions first.
This article is for general educational purposes only and is not tax, legal, or investment advice. Equity-compensation and wealth-planning rules are complex and depend on your specific situation; consult a qualified tax professional or financial advisor before acting.
