Tom Taulli at Barron's wrote about what the SpaceX IPO means for advisers as the next mega offerings line up. More than 4,000 SpaceX employees, about 20% of the company, became millionaires, and OpenAI and Anthropic have both filed to go public. Pre-IPO wealth planning is no longer a one-time event.
The mistake I see most often is technical and avoidable. Someone exercises incentive stock options, feels good about the decision, then gets hit with the alternative minimum tax on the exercise and never saw it coming. The levers that matter are timing: when you exercise, how big the spread is between strike and fair market value, and whether you will have liquidity to cover the tax bill before you are allowed to sell. AMT is not automatically bad. It just requires planning before the exercise, not after.
The second mistake is emotional. Most employees who watched a company grow have enormous attachment to the stock, and the same conviction that got them the windfall makes them reluctant to reduce it. My conversation with clients is always the same: concentration got you here, diversification keeps you here. A systematic sale plan over multiple years, paired with charitable giving of appreciated shares, reduces both the tax bite and the resistance to selling.
Read the full article at Barron's →
