One position, most of your net worth: working through concentrated stock

Executives, founders, and long-tenured employees often end up with most of their net worth in one company's stock. Usually it happened by succeeding rather than by deciding. The position grew, selling meant a tax bill, and each year it became a larger share of the total.

By the time someone raises it with an advisor, the standoff is familiar. Selling costs a great deal in tax. Holding leaves the family's security tied to one company's fortunes.

Name the risk before choosing a tool

Start with a question people avoid: if this position fell by half and stayed there, what changes about your life. For some families the answer is that retirement moves out by a decade. For others the rest of the balance sheet carries the plan and the position is upside.

Those two families should not do the same thing, and the tax analysis cannot tell you which one you are.

Approaches that generally apply

Staged selling across tax years

Selling a set portion each year spreads the gain across brackets rather than stacking it into one. Unglamorous, and it does more than most alternatives. The discipline comes from setting the schedule in advance, because judging the right moment year by year usually turns into holding.

Offsetting with losses

Realized losses elsewhere in the portfolio can offset gains on the position. Harvesting losses through the year, rather than in December, tends to produce more of them, and they can be banked against a planned sale.

Giving appreciated shares instead of cash

For families who already give, donating appreciated shares rather than cash is usually more efficient than selling and donating the proceeds. A donor-advised fund lets you move a block in one year and direct the grants over time, which pairs well with a high-income year.

Diversifying everything around it

If the position is staying for now, the rest of the portfolio should be built as its counterweight rather than as a standalone allocation. Holding more of the same sector alongside a large single-company position is a common and avoidable mistake.

The strategies that need a closer look

Exchange funds, collars, prepaid variable forwards, and borrowing against the position all exist and can be appropriate. They also carry costs, complexity, holding periods, counterparty considerations, and in several cases tax rules that punish getting the details wrong. Some are unavailable to insiders or during trading windows.

None of these belongs in a summary article. Each is worth understanding with your tax advisor and someone who has implemented them before.

The constraint people forget

If you are an officer, director, or otherwise an insider, your trading is governed by windows, pre-clearance, and possibly a Rule 10b5-1 plan. Those rules shape the timeline more than the tax analysis does, and a plan built without them tends to collapse on contact with the general counsel.

General information only, not a recommendation to buy, sell, or hold any security. Tax treatment depends on your circumstances and on rules that change. Work with your own tax and legal advisors.