Leaving a company starts a countdown on every outstanding option. Use this checklist to make sure a client doesn't lose value to a deadline they never tracked.
Map the deadlines
For ISOs, confirm the exercise date falls within 90 days of termination — this is a statutory requirement (IRC §422), not a plan choice
For NQSOs, confirm the plan's specific post-termination exercise window — companies set this independently, and it can be shorter or considerably longer than 90 days
Separate vested-and-exercisable options from unvested, forfeited ones
Flag any options nearing their original expiration date regardless of the termination window
Plan the funding
Determine whether the client has cash on hand to cover the exercise cost
Evaluate a cashless exercise or sell-to-cover approach if liquidity is tight
Confirm whether the company plan permits a net exercise
Model the tax consequences
For ISOs exercised within the 90-day window, calculate potential AMT exposure on the spread
For ISOs exercised after day 90, confirm they've automatically converted to NQSO tax treatment — the spread is ordinary income
For NQSOs, confirm the ordinary income and payroll tax due at exercise
Compare the after-tax value of exercising now against letting the options lapse
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