How to Give Stocks as Gifts
Since you are reading this, you are already considering giving stocks as gifts. Congrats! Gifting stocks is the gift that keeps on giving. When you gift stock, you are giving the gift of company ownership through stocks. How to gift stocks will depend on to whom, your taxes, and the source.
Custodial Brokerage Account for Kids
You can gift stock to kids with a custodial brokerage account. A custodial brokerage account is a brokerage account opened by an adult for a minor. The adult manages the account until the minor reaches the age of majority specified by the state. With this account, stock can be bought in it and transferred to it. Family and friends can also contribute to it. This is a great way to spark an interest in finance and teach them how to invest. Stockpile is the easiest to do this. You can start by buying them stock in things they like.
- Mattel (MAT): Barbie, Hot Wheels, American Girl, UNO, Fisher-Price
- Hasbro (HAS): Baby Alive, Nerf, Play-Doh, Monopoly, Candy Land
- Disney (DIS): Marvel, Star Wars, Frozen
- Roblox (RBLX)
- Activision Blizzard (ATVI): Call of Duty, Warcraft
- Take-Two Interactive Software (TTWO): NBA 2K, Grand Theft Auto
- EA Sports (EA): Madden, FIFA, NBA LIVE, Battlefield
- Apple (AAPL): iPhone, iPad, Apple Watch, AirPods, Beats headphones
- Microsoft (MSFT): Xbox, Minecraft
- Nike (NKE): Nike, Jordan
Assets in a custodial brokerage account are counted as income when applying for financial aid. There is also a kiddie tax that applies to dividend income over $2,200 in a year. Do your own research and consult with a CPA and CFP to determine what is best for your goals and plan.
Transfer Stock
You can gift stock by transferring stock from your brokerage account to the recipient’s brokerage account. The recipient can be a family member, friend, or charity. The transferred stock has to be owned in your brokerage account. If you want to transfer a stock you don’t own, it will have to be bought first. Fractional shares can not be transferred.
To gift stock by transferring, you will transfer stock from your taxable brokerage account to the recipient’s taxable brokerage account. You can also use your Employee Stock Purchase Program (ESPP) brokerage account to transfer stock to recipients. Before transferring stock, check with your broker on the process and if there are any fees. As always, do your own research and consult with a CPA and CFP to determine what is best for your goals and plan.
Send Stock
You can gift stock by sending stock like you can send money to someone with Cash App or Venmo. The recipient can be a family member or friend. You can send stock by the dollar starting with $1. So if a stock cost $1,000 for 1 share. You don’t need $1,000 to send the stock and can send fractional shares. I gift stocks this way by using Cash App and Stockpile.
Cash App
Stockpile
Stockpile was created for the purpose of gifting stock. It makes it easy to gift of stock by offering gift cards.
Pros
- You can buy stock gift cards without opening an account
- You can share a stock wish list for friends and family to buy
- You can choose the company you want to redeem gift card for
- You can buy fractional shares
- You can set up a custodial brokerage account
- Kids can buy and sell stocks with an adult’s approval
Cons
- Orders are not executed instantly
Recap
Gifting Stocks is the gift that keeps on giving. When you gift stock, you are giving the gift of company ownership through stocks. How to gift stocks will depend on to whom, your taxes, and the source. Determine what is the best way for you to gift stocks and start giving.