Estate Planning with RSUs: UK Tax and Legacy Planning Guide

Estate planning with RSUs requires more than simply including company shares in your will. Restricted Stock Units (RSUs) are employment-related awards, and their treatment can depend on whether they have vested, the rules of your employer’s share plan and what happens to outstanding awards on death.

For employees and executives with substantial equity compensation, RSUs can become an important part of personal wealth. As their value increases, they can also affect your wider estate planning UK position, including Inheritance Tax (IHT), succession arrangements and the assets available to beneficiaries.

The first step is therefore to distinguish between unvested RSU awards and shares you already own following vesting. They should not automatically be treated as the same asset for estate planning purposes.

What Are RSUs?

Restricted Stock Units are a form of employment-related compensation linked to company shares. An RSU award normally represents an agreement to issue shares at a future point when specified vesting conditions have been satisfied.

Conditions can depend on factors such as:

• Remaining employed for a specified period.
• Meeting performance conditions.
• Reaching a particular vesting date.
• Satisfying other conditions imposed by the employer’s plan.

When an RSU vests and shares are delivered, employment tax consequences normally need to be considered. Once you own the resulting shares, subsequent growth in their value can also create Capital Gains Tax considerations when the shares are eventually disposed of. Wider personal tax guidance for employees in London can help explain how employment income, investments and capital gains fit into the individual’s overall tax position.

Why Estate Planning with RSUs Requires Special Attention

For conventional investments, it is usually straightforward to establish which assets an individual owns. RSUs can be more complicated because an employee may simultaneously hold vested company shares and outstanding awards that have not yet vested.

A sound RSU estate planning review should therefore identify:

• How many RSUs remain unvested.
• How many company shares have already been acquired through previous vesting.
• The current market value of vested shares.
• The vesting dates and conditions attached to outstanding awards.
• What the employer’s plan says happens following death.
• Whether any beneficiary nomination or other succession provision exists.

This information helps executors and beneficiaries understand what forms part of the estate and what rights may arise under the employment-related share plan.

What Happens to Unvested RSUs When You Die?

There is no universal rule stating that all unvested RSUs automatically transfer to beneficiaries.

The outcome depends heavily on the terms of the particular employer’s RSU plan and award agreement. Depending on those rules, outstanding awards might vest early, continue under modified conditions, pass according to specific death provisions or lapse.

This is why simply stating in a will that a particular beneficiary should receive your RSUs may not determine what happens to an unvested award.

As part of estate planning with RSUs, employees should obtain and retain copies of their award agreements and current plan rules. Executors should also know where these documents are stored and whom to contact at the employer or plan administrator.

What Happens to Shares from Vested RSUs?

Once RSUs have vested and the resulting shares are legally owned by you, those shares are generally assets that need to be considered as part of your estate.

The shares should therefore be reviewed alongside other investments, cash, property and personal assets when preparing your will and estimating potential Inheritance Tax exposure.

This distinction is important: unvested RSUs are contractual employment-related awards, while shares already delivered following vesting are owned investments.

RSU Estate Tax and Inheritance Tax

In the UK, the relevant estate tax is generally Inheritance Tax. When somebody dies, their estate is valued to determine whether IHT is payable.

For 2026/27, the standard nil-rate band remains £325,000. A residence nil-rate band of up to £175,000 can also be available where the relevant conditions are satisfied.

Inheritance Tax is normally charged at 40% on the taxable value of an estate above the available thresholds after considering exemptions and reliefs.

For someone with significant vested company shares, the value of those investments can therefore materially affect their RSU estate tax position and overall IHT exposure. The IHT treatment of pension death benefits in London should also be considered separately where pension wealth forms a significant part of the individual’s wider succession arrangements.

How Are Vested RSU Shares Valued for Inheritance Tax?

Shares forming part of an estate generally need to be valued at their appropriate market value at the date of death.

HMRC provides specific rules for valuing listed and unlisted shares. Listed shares are generally valued using the relevant market quotation at the date of death, while unlisted company shares can require a more detailed valuation.

This is particularly relevant for senior employees and executives who have accumulated substantial holdings in their employer’s shares through repeated RSU vesting.

Executors should retain records showing:

• The number and class of shares held.
• The date of death.
• Relevant share prices and valuations.
• Any dividends due.
• Details of unlisted holdings where applicable.

What Tax Do Beneficiaries Pay on Inherited Shares?

A beneficiary does not normally have an immediate Income Tax or Capital Gains Tax charge simply because they inherit shares. Different rules apply to the tax on inherited private pensions in London, so pension benefits should be considered separately from inherited company shares when reviewing a beneficiary’s tax position.

However, tax consequences can arise after inheritance. For example, dividends received on inherited shares may be taxable, while Capital Gains Tax may arise if the beneficiary later sells the shares for more than their relevant value at the date of death.

This makes an accurate date-of-death valuation important for both estate administration and the beneficiary’s future tax records.

Should You Keep Vested RSU Shares or Diversify?

One of the practical estate planning strategies for employees receiving substantial RSUs is to consider concentration risk.

An executive may receive salary, bonuses, pension benefits and RSUs from the same employer. Holding most vested shares indefinitely can result in a large proportion of personal wealth depending on the performance of one company.

Estate planning should therefore consider not only tax but also the composition of the assets that beneficiaries could ultimately inherit.

A decision to sell or retain vested shares should reflect investment objectives, tax consequences, personal circumstances and risk tolerance rather than estate tax considerations alone.

Using Trusts in RSU Estate Planning

Trusts can form part of wider estate planning, but the original article’s suggestion that RSUs can simply be transferred into a trust needs qualification.

Whether an unvested RSU can be assigned or transferred is determined by the employer’s plan rules and the legal nature of the award. Many awards are subject to restrictions that prevent employees from freely transferring them.

Shares already acquired following vesting are different. Where legally permitted, an individual may consider transferring owned shares into a trust, but this can itself have significant tax consequences.

A lifetime transfer into trust can potentially create:

• Inheritance Tax consequences.
• Capital Gains Tax consequences.
• Trust Registration Service requirements.
• Ongoing Income Tax and CGT obligations for trustees.

A trust should therefore not be established solely on the assumption that it automatically removes RSU-related wealth from an estate.

Review Your Will Alongside Your RSU Awards

Your will remains an important part of estate planning UK, particularly for shares already legally owned at death. Understanding the requirements for a valid will in London is important when documenting how vested shares and other personally owned assets should pass to beneficiaries.

However, your will should be reviewed alongside the terms of your RSU plan rather than in isolation.

Employees with substantial equity compensation should make sure their executors can identify:

• Company shares already owned.
• Outstanding RSU awards.
• RSU plan documentation.
• Share dealing or brokerage accounts.
• Employer and plan administrator contact information.
• Relevant tax and vesting records.

This can significantly reduce uncertainty when the estate is administered. Executors should also understand the tax responsibilities when managing an estate in London, including identifying assets, dealing with HMRC and reporting tax arising during the administration period.

Consider Capital Gains Tax on Vested Shares

RSUs can also create Capital Gains Tax considerations during your lifetime.

When shares are acquired following vesting, their subsequent disposal can create a capital gain or loss. Broadly, the CGT calculation considers the disposal proceeds against the relevant acquisition value and allowable costs.

This means employees accumulating vested RSU shares should retain vesting statements, share valuations and sale records. Without accurate records, calculating the eventual gain can become difficult, particularly where shares have vested through numerous awards over several years.

Keep Your RSU Estate Plan Up to Date

Estate planning with RSUs should be reviewed periodically because the value and composition of equity compensation can change substantially. Future planning should also take account of the pension and IHT changes from April 2027 where unused pension funds or death benefits could affect the value exposed to Inheritance Tax.

A review may be particularly appropriate after:

• A major RSU vesting event.
• A significant increase in the company’s share price.
• Receiving a new equity award.
• Changing employer.
• Marriage, divorce or the birth of a child.
• A substantial sale of company shares.
• Changes to your will or wider estate arrangements.

Someone whose RSUs represented a relatively small part of their wealth several years ago may now have a substantial shareholding and a very different potential Inheritance Tax position.

Practical Estate Planning Strategies for RSU Holders

A practical RSU estate review should bring together the employment, investment and estate tax aspects rather than treating each separately.

• Separate vested and unvested awards: establish exactly which shares you legally own and which awards remain conditional.
• Review the RSU plan: check what happens to outstanding awards following death.
• Value existing shares: understand how much of your estate is concentrated in employer stock.
• Estimate IHT exposure: consider company shares alongside property, investments and other assets.
• Review your will: make sure your instructions remain appropriate for assets you actually own.
• Maintain records: retain vesting statements, award agreements and transaction records.
• Consider concentration risk: decide whether continuing to hold large amounts of employer stock fits your wider financial objectives.
• Review regularly: revisit your arrangements as awards vest and personal circumstances change.

Protecting Your Legacy When You Hold RSUs

The most important aspect of estate planning with RSUs is recognising that an outstanding RSU award and an owned company share are not necessarily the same thing.

Unvested awards should be reviewed against the employer’s plan rules to establish what happens on death. Vested shares, meanwhile, should be incorporated into the valuation of your wider estate and considered when reviewing Inheritance Tax exposure, your will and investment concentration. In some circumstances, beneficiaries may also consider changing a will after death in London where the original distribution no longer produces the intended family or tax outcome.

For employees and executives whose equity compensation represents a significant proportion of their wealth, combining RSU estate planning with wider tax and succession planning can help ensure that executors understand the assets involved and that beneficiaries receive them in accordance with the arrangements actually available.

Disclaimer: This article provides general information about UK estate planning and RSUs for 2026/27. The treatment of an RSU award depends on the employer’s plan documentation, vesting conditions, employment circumstances and the individual’s wider estate. Legal advice should be obtained when preparing or amending a will or trust.

Case Study: Reviewing RSUs as Part of an Executive’s Estate Plan

James approached our Wimbledon office after several years of receiving Restricted Stock Units (RSUs) from his employer. A significant number of awards had already vested into company shares, while further RSUs remained subject to future vesting conditions. As the value of his employer’s shares had increased substantially, he wanted to understand how they should be considered within his estate planning.

Cigma Accounting first separated the shares James already legally owned from his outstanding unvested RSU awards. We explained that vested shares would generally need to be considered alongside his property, investments and other assets when assessing his potential Inheritance Tax exposure. The position of unvested RSUs was different because their treatment on death depended on the terms of his employer’s share plan and individual award agreements.

We reviewed the value of his existing shareholding alongside the rest of his estate and considered the available IHT thresholds. We also highlighted the importance of keeping award agreements, vesting statements and brokerage records accessible so that his executors could identify both owned shares and outstanding awards.

As part of the wider review, Cigma Accounting considered James’s personal tax, Capital Gains Tax, investment taxation and Inheritance Tax planning. We also discussed the tax implications that could arise if vested shares were sold, gifted or considered as part of a wider trust arrangement, rather than assuming that moving shares would automatically produce an estate tax advantage.

James was left with a clearer picture of how much of his wealth was concentrated in employer shares, how vested and unvested RSUs should be treated differently and which areas of his estate plan needed to be coordinated with his solicitor and employer’s share-plan administrator.