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09/17/2026

What to Do With Your Money in the First 90 Days After a Liquidity Event

By Dan Magier CFP® and CAIA®

The wire clears and the balance on the statement is the largest number you have ever owned. Most of that balance isn't yours yet because you haven't paid the tax on it. Within weeks, private deals and requests for money start arriving. Most of them are far easier to get into than out of.

The same 90-day clock starts after most large liquidity events, whether the money came from selling a company, a partnership buyout, a carry distribution, or an equity award that settled at a public listing. The tax owed on each of those is calculated differently, so the reserve in Step 1 depends on which one produced your money. Everything after Step 1 is the same regardless of the source.

Ninety days is enough time, provided the work happens in the sequence below and the irreversible decisions come last.

Step 1. Days 1 to 15: Custody and the Tax Reserve

Don't keep a large balance in one bank account. Federal deposit insurance covers up to $250,000 per depositor, per insured bank, per ownership category, which leaves an eight-figure balance almost entirely uninsured.

Two places to hold it while the long-term plan is built:

  • Short-term Treasury bills, which are government debt maturing in a year or less, held across more than one financial institution. The money stays accessible and earns interest.
  • Government money market funds, which are easier to move in and out of. These carry no deposit insurance and their value can move, though the government-only versions hold nothing but short-term government debt.

The tax reserve comes next. How much you set aside depends on which kind of event produced the money.

If the proceeds came from selling stock or a partnership interest you held, most of the amount is usually taxed as capital gains. The reserve needs to cover:

  • Federal capital gains tax
  • The 3.8% net investment income tax, an additional federal tax on investment income above certain thresholds
  • State and city tax
  • Less any exclusion for qualified small business stock, a federal break under Section 1202 that can remove part or all of the gain on founder or early-employee shares in a qualifying company, if you have held the shares long enough

These components apply differently depending on your state, your filing status, and the character of the proceeds. Please consult your tax advisor regarding your specific situation.

If the proceeds came from compensation, ordinary income rates apply instead, and they run higher. This covers equity awards that settle at a public listing, buyout payments structured as income, carried interest that has not met its three-year holding requirement, and large fee awards. Here the problem is withholding rather than the reserve:

  • Employers withhold at the 22% supplemental wage rate on the first $1 million and at 37% above that
  • A combined federal, state, and city rate above those figures leaves a shortfall, and the shortfall is what you set aside

Your estimated tax payment for the quarter in which the money arrived is due on the usual schedule. At the income levels this article addresses, the safe harbor is 110% of last year's total tax. Paying that amount through withholding and quarterly estimates can protect you from an IRS underpayment penalty. It does not reduce what you owe, and the balance is still due at filing. Withholding rates and safe harbor calculations are general figures. Your tax advisor can confirm the amount that applies to your return and the date it is due.

Step 2. Days 15 to 45: The Decisions to Defer

The flood of investment offers and requests that arrives after a publicized liquidity event catches many by surprise.

Private business deals, requests from friends to invest, direct real estate opportunities, and private operating companies all start showing up within the first month, and each one is much harder to sell or exit than publicly traded stocks. Resisting those immediate pitches is essential, because making a major purchase or investment in your first month means committing funds before you've finalized your new long-term financial plan.

Requests from family members for financial help often arrive during this same tight window. Setting a clear, written policy before you start those individual conversations is much easier to maintain than making decisions one call at a time.

This is also the right time to review your personal liability insurance and how your assets are titled, as your public profile and visibility change the moment the transaction becomes public.

Step 3. Days 30 to 60: What Estate and Charitable Planning Is Still Open

While gifts made after the money arrives cannot reduce your tax bill retroactively, several strategies are still available.

Timing your charitable donations to match this high-income year can reduce your tax burden. Beginning with the 2026 tax year, itemized charitable deductions are subject to a floor of 0.5% of adjusted gross income, which is your total income after certain adjustments, and for top-bracket filers the value of itemized deductions is capped at 35 cents per dollar.

Making a single, large contribution in the year the money arrives clears that floor, and a donor-advised fund, which is an account you fund now and grant from over time, can handle that process efficiently. A charitable remainder trust, which pays you income for a period of years and passes the remainder to charity, can work if you prefer to spread income across multiple years. Deduction floors and caps depend on your income for the year and how you file. Confirm the treatment with your tax advisor before making the contribution.

This applies only to the qualified small business stock described in Step 1. The full exclusion requires a five-year holding period. Shares issued after July 4, 2025, also carry partial exclusions at three and four years, so whether selling early costs you anything depends on when your shares were issued. If you held the shares for more than six months and sold before reaching the five-year mark, Section 1045 allows you to elect to roll the proceeds into replacement qualifying stock within 60 days of the sale. Equity compensation from a public company does not qualify, and neither do partnership or fee payments. Whether your shares qualify under Section 1202, and whether a Section 1045 election is available to you, depends on facts specific to the company and to when your shares were issued. Your tax advisor and your attorney should confirm both before you act on the 60-day window.

Your foundational estate documents remain open for updates. That includes a revocable trust, which holds assets during your lifetime and passes them without probate, along with powers of attorney and the beneficiary designations on your accounts.

Step 4. Days 60 to 90: Policy Before Deployment

Calculate how much cash you need over the next two years from your real expenses.

Draft the investment policy before any capital moves. Your advisory team writes it, and it should state your target mix of assets, the amount of cash you keep accessible, the conditions under which the portfolio returns to those targets, and what would justify amending the policy itself. The value is in fixing it in writing before the first allocation decision, while the reasoning is still yours and not a reaction to whatever the market did that week.

Spreading purchases across several months may reduce the risk of committing everything at one price. Long-term investments that are hard to sell belong at the end of the sequence, after the core accessible money is in place, because tying up cash early can limit your flexibility for everything else.

After the Sequence: Why Post-Sale Coordination Fails

Your attorney and your accountant each handle a different part of the work after a liquidity event, and your financial advisor handles a third. They rarely coordinate their schedules after the transaction. Next Capital's wealth planning services are built around sequencing this work. Next Capital acts as the central coordinator for your entire team, and the work is designed to keep your tax payments and your investment schedule on the same timeline.

If your liquidity event happened within the last 90 days, several of the steps above carry deadlines and need sequencing guidance.

Schedule a conversation with our team by calling (212) 433-1111 or emailing info@nextcapitalmgmt.com.

Frequently Asked Questions

How much should I set aside for taxes after a liquidity event?

It depends on how the proceeds are taxed. For a sale of stock or a partnership interest, set aside enough to cover federal capital gains tax, the 3.8% net investment income tax, and state and city tax, reduced by any Section 1202 exclusion you qualify for. For compensation income, including equity awards that settle at a listing and large fee or buyout payments, your top marginal rate applies, and employer withholding at 22% on the first $1 million usually falls short of it. Segregate the amount the week the money arrives. At these income levels the safe harbor is 110% of last year's total tax, and paying that through withholding and quarterly estimates can protect you from an underpayment penalty. The figures above are general. Your tax advisor can calculate the reserve for your situation.

Is it too late to do estate planning after my liquidity event closes?

No, though your choices are more limited. Transfers of appreciation that occurred before the event had to be funded beforehand. What remains open includes revocable trusts and other foundational documents, along with updated beneficiary designations. You can still apply transfer strategies to future growth in the newly diversified portfolio. Confirm which ones apply within the first 60 days.

Where should I park proceeds from a liquidity event?

Short-duration Treasury bills or a Treasury money market fund, spread across multiple custodians. FDIC insurance covers $250,000 per depositor, per insured bank, per ownership category, so a large balance in a single account is mostly uninsured. Treasuries stay liquid, so nothing forces an allocation decision before you're ready.

How long should I stay in cash before investing after a liquidity event?

Until the investment policy is written, which usually takes 60 to 90 days. The policy sets your allocation targets and your cash requirements, and it defines when the portfolio returns to those targets. Spreading purchases after that may reduce the risk of committing everything at one price. Next Capital works through that policy with clients before deploying capital.

About Dan

Dan Magier is a Partner and Managing Director of Wealth Strategy and Advisory at Next Capital Management, where he works with founders, executives, and complex families on pre-liquidity planning, tax strategy, and multigenerational wealth coordination. He holds the CFP® and CAIA® designations and earned a BA in Economics from the University of Michigan.

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