Updated August 7, 2026. Quick answer: a severance package is three decisions wearing one envelope — how the money is paid, when it lands in a tax year, and what you give up by signing. Most of it is time-limited, and the deadline on the agreement is usually shorter than the time it takes to price the alternatives. The value of advice here is almost entirely about sequence, not about investments.
The four questions that decide whether they understand severance
- “Should this be paid as a lump sum or as salary continuation, and why for me?” The answer changes your tax year, your health coverage, and often your unemployment eligibility. An advisor who has no view here has not priced the decision.
- “What does the withholding actually do to my bill?” Severance is generally treated as supplemental wages, and the amount withheld is frequently not the amount owed. A refund is not a plan and a surprise bill is not a surprise if it was predictable.
- “What am I giving up by signing, and what is negotiable?” Non-compete scope, unvested equity, the release itself. Some packages are more negotiable than the cover letter implies, and the answer is time-sensitive.
- “What happens to the equity and the retirement plan?” Vesting cliffs, option exercise windows after termination, and what to do with the old plan are separate decisions with separate deadlines — and the exercise window is usually the shortest clock in the package.
Before the conversation, put the dates on paper: the layoff deadline calendar turns your separation date into every statutory deadline that follows.
What a good one looks like for this audience
Someone useful here will ask for the agreement before quoting a fee, because the deadline in it determines what is even possible. They will talk about the tax year before they talk about the portfolio. And they will say plainly which parts of the package are fixed and which are worth pushing on.
The warning sign is an advisor who moves straight to investing the proceeds. The proceeds are the last decision, not the first, and anyone who starts there is pricing their own service rather than your situation.
On cost: this is a bounded, one-off piece of work. An hourly or flat-fee engagement usually fits it better than a percentage of assets — see hourly advisors and flat-fee advisors, and run the break-even calculator before agreeing to anything ongoing.
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Before the conversation, it helps to know how much time you actually have: a release of age claims carries at least 21 days to consider it, 45 in a group programme, and 7 days to revoke after signing that cannot be shortened — how long you have to sign a severance agreement. If retiree medical is in play, check the eligibility cliff before anything is signed, because it is measured on your separation date.
The rest of the work this touches
How severance and deferred comp are taxed by state — the one that catches people who move. Equity compensation covers the vesting and exercise-window side. Consulting for your former employer is the common next chapter, and it has its own tax shape.
Before you hire anyone
Read the agreement and write down its deadline first. Everything else is decided against that date. Then price the two payment shapes against your own tax year, and only then ask what advice would cost. What advice should cost is worth reading before you commit to anything ongoing.
General information about how severance is structured and taxed, not legal or tax advice on your agreement.