Thursday, May 19, 2022

How To Gift Someone Stock

Great Stocking Stuffers For Kids

How to Gift shares of stocks to someone with TD Ameritrade (3min)

Investing for kids can prove a great way to gift this year. Consider reviewing the following custodial brokerage accounts in the table with special highlights on about a select few apps beneath.

App

Greenlight + Invest is an investment account for kids that comes paired with a debit card for kids and teens.

Its easy to use and can double as a savings account and banking app for teens. The app will teach you the basics of investing, how to invest in stocks and ETFs, etc.

It works best if parents and/or grandparents are involved in the process because it requires linked accounts from the custodians banks or brokerages.

The all-in-one plan teaches them important financial skills like money management and investing fundamentals with real money, real stocks and real-life lessons.

You can use the investing feature to:

  • Buy fractional shares of companies your kids admire
  • Start investing with as little as $1 in your account
  • No trading commissions beyond the monthly subscription fee
  • Parents approve every trade directly in the app on individual stocks and ETFs with a market capitalization of $1 billion+

Consider opening a Greenlight Card + Invest account to start investing in a custodial brokerage account for your kids today. The first month is free to trial the product and see if it meets your needs for giving a financial gift to kids.

Read more in our Greenlight Card review.

  • Available:
  • Price: Acorns Lite: $1/mo, Acorns Personal: $3/mo, Acorns Family: $5/mo

Transfer Stock You Already Own

If you already own stock, you can transfer ownership of some shares to the recipient. This works well if your recipient already has a brokerage account.

You might find procedural details on your brokerages website. Fidelity Investments, for example, has a How to Gift Shares webpage. If you cant find such information, start by asking your brokerage about its transfer procedures. Such rules can vary from firm to firm.

My grandma gifted stock shares to me and my cousins this way. It was what she gave us for Christmas every year, transferred into custodial accounts with the intention of the stock remaining there until college.

Those shares have helped fund several degrees so far. Talk about a gift that keeps on giving.

For more neat gift ideas, check out our 2017 holiday shopping season page.

Have you ever given stock as a gift? Would you consider doing it? Let us know what you think by commenting below or on .

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

What Counts As A Gift

Gifts include:

  • household and personal goods, for example, furniture, jewellery or antiques
  • a house, land or buildings
  • stocks and shares listed on the London Stock Exchange
  • unlisted shares you held for less than 2 years before your death

A gift can also include any money you lose when you sell something for less than its worth. For example, if you sell your house to your child for less than its market value, the difference in value counts as a gift.

Anything you leave in your will does not count as a gift but is part of your estate. Your estate is all your money, property and possessions left when you die. The value of your estate will be used to work out if Inheritance Tax needs to be paid.

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How To Give Cryptocurrency As A Gift

    Cryptocurrencies are no longer just the domain of fintech nerds. Even the least technologically inclined among us have heard of them, with their volatile price swings and surges in value making the news in pretty much every corner of the globe.

    Opinion on whether to invest in this asset class is varied. Plenty of experts warn that digital money such as Bitcoinwill never become entirely mainstream and are, therefore, overpriced and destined to plummet in value. Others take a more positive view, claiming that cryptocurrencies are the future, that people buying them now can still make a fortune, and that they, as a result, should be high on our shopping lists.

    Investment And Finance Books

    How To Buy Someone Stock As A Gift

    Image via

    Bad Blood: Secrets and Lies in a Silicon Valley Startup, by John Carreyrou

    As we approach the close of 2019, this book ranks high on Amazons best-seller list. This is an excellent choice for the investor who loves a good page-turner.

    Documenting the rise-and-fall of a biotech startup in Silicon Valley, the story divulges the juicy details of a startup valued at $9 billion. The startup was ultimately exposed as being built on a foundation of lies and deceit. 6.

    The Intelligent Investor by Benjamin Graham

    This is a classic title that will make an excellent gift for any investor on your list. This book was written as an investment guide and is revered by many for its timelessness.

    If you need a unique gift for the investor who relies on tradition and historical perspectives for success, this book fits the bill. It is also referred to by Amazon as the stock market bible.

    For more financial book ideas to give an investor, read Investopedias 7 Top Finance Books to Gift this Christmas.

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    Stocks As A Gift With Strings Attached

    The recipient of any stocks as a gift are free to do whatever they wish with the shares once the transfer is complete. However, you can still maintain some degree of control over the gifted stocks via two tactics:

    1. Setting up a Custodial Account

    A custodial account will allow you to manage the shares on behalf of the recipient until they come of age. Regulations on how much control you can assert vary from state to state. For example, some states will allow you to defer access time up to the recipients 25th birthday while others grant recipients access as early as their 18th birthday.

    P.S. under the Uniform Transfer to Minors Act , the shares are the sole property of the minor, and your only entitlement as the custodian is an oversight.

    2. Establishing a Trust Fund

    A trust fund affords more authority and flexibility compared to a custodial account. As the sender, you can give detailed guidelines on how the shares are to be used, including whether or not they should be sold and how any proceeds should benefit the recipient. A trust fund is applicable for minors as well as adults.

    How To Gift Stocks This Christmas

    If youre not sure what to get your loved ones for Christmas this year and want to think beyond the usual clothes and toys, it might be worth gifting them something that could help them with their finances in the long-run: stocks.

    A study by IG showed searches for for gifting shares to family members UK in the UK surged 180% in time for the holiday season.

    Globally, there has been an 80% increase in searches for how to purchase stocks as a gift.

    Chris Beauchamp, chief market analyst at IG, said gifting shares, particularly to young people, might not rank among the most exciting presents, but they represent a much better long-term gift than some rapidly disposed-of toy or a well-meaning pair of socks.”

    He said: “Choose shares whose prospects look good at the present time and of companies that are well-managed, ideally with a sound dividend stream and cash generation too.”

    He added that it is worth having a discussion of the merits and pitfalls of investing with the recipient, especially if they have never invested before – “some background education on how the market works and its value as long-term investment would not be a bad gift either.”

    Meanwhile Laura Hoy, equity analyst at Hargreaves Lansdown, said when gifting stocks to children, it helps to do so for a company they have heard of and know what it does.

    Read more: ISAs remain super stars of UK’s tax saving options

    Practically, one way to gift shares is via Interactive Investor.

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    How To Keep The Holiday Spirit

    Publicly traded companies have basically ended issuing physical paper stocks, so the idea of having something to wrap and unwrap is gone. However, there are alternatives to keep the holiday joy going.

    You can use UniqueStockGift or GiveAShare to order physical stocks printed and shipped to be framed. For example, consider buying a ‘physical’ share of Disney for a child who is a big Disney fan.

    The stock will be purchased at market value, and then the security will be issued in the gift recipient’s name. This stock will come with a unique ID number and is held with a transfer agent that keeps record of all issued stocks. If your gift recipient wants to either transfer the shares to a digital brokerage or sell the stock completely, the physical stock certificate must be mailed to a Direct Registration System .

    A physical stock certificate is no different than a stock you purchase digitally, and it can make for a great holiday gift for someone to unwrap.

    Gifting Stocks To Charity

    How to give stocks as gifts

    Donating stocks to charity can result in a tax break if youre able to deduct the donation from your taxable income. How you can donate stocks to charity often depends on the organization and whether they have the capability to accept electronic transfers of stock shares. Your online brokerage may be able to help with advice on the best way to make a donation.

    If youre donating stocks to charity and you plan to claim that on your taxes, make sure youre documenting the transaction properly. This usually means some kind of written letter detailing who the stocks were gifted to, the value or amount donated and the date of the donation.

    A donor-advised fund may be something to consider if you have more than just a few shares of stock you want to give to charity or you want to make ongoing gifts. Donor-advised funds are cheaper to set up and maintain than private foundations for people who want to create a legacy of philanthropic giving while enjoying tax advantages.

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    Benefits Of Gifting Stock

    There are quite a few benefits to giving stock as a gift.

    Over the long-term, gifting a stock can prove to be a valuable gift if the stock appreciates. And even if it doesnt, the person who receives the stock doesnt have to bear the loss since you paid for it. Its also a good way to introduce and encourage children or teens to think about investing. Also, giving fractional shares or shares of an ETF may be a way to gift stock without breaking the bank.

    In addition, gifting stock may have some beneficial tax implications. One is the annual exclusion limit, a gift under which is not liable for the gift tax. By gifting stock you also, in effect, defer paying capital gains taxes since the tax is paid by the recipient of the stock when they sell the shares you gifted them.

    How Taxes Work When You Give Stock As A Gift

    If you thought gifting stocks was a way to get out of taxation in the United States, think again. Getting shares of stock as a gift still means getting taxed, for both parties.

    How the recipient will be taxed:

    The recipient will take on the burden of capital gains tax, but only after they sell. Whether they are charged for short-term or long-term capital gains tax depends on the amount of time they hold the position . On the other hand, capital losses can serve as a tax write-off up to a certain amount.

    Length of time is just one factor that affects how much the recipient will pay in capital gains taxes. Other factors include the cost basis and the stocks value at the time of receipt.

    How the sender will be taxed:

    As a gift giver, you may still encounter taxation, even though youve given the stock away. If the shares have appreciated since you purchased them, you may own capital gains taxes yourself.

    Depending on the size of the gift, you may also need to report it to the IRS. In 2020, you can give up to $15,000 to anyone as a gift and not have to report it. Any more than that and it applies to your lifetime exemption.

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    Where To Buy Stocks

    Unlike savings bonds, there are many ways to buy an individual stock as a gift. The number of options and the ease of transfer makes this a better option if you are looking for convenience.

    If you arent sure where to get started, here are some easy options for giving stocks as gifts.

    • Betterment. With Betterment, you can donate shares from taxable accounts to charitable organizations.
    • GiveAShare. You can give stock as a gift though GiveAShare, but the options are somewhat limited. Most of the stocks available are for companies that have a household name like Coca-Cola, Disney or Apple.
    • Computershare. Computershare will connect you to companies that sell individual stock. It handles most of the legwork, so you just have to buy the stock. Some of the companies have a minimum purchase amount, but the requirement will vary by company. It is a very popular platform that makes gifting stocks easy.
    • Buy directly from the company. Many companies allow you to purchase individual stocks directly from them. However, the process might be complicated. To find out if a company sells individual stocks as a gift, take a look at their website or call their customer service line.

    How To Gift Stocks You Already Have In Your Account

    Person Touching A Gift · Free Stock Photo

    Youre able to initiate transfers of stock, mutual funds, and other securities you hold in your accounts to various other account types. Again, the biggest logistical hurdle is that youll need the recipients Social Security Number or account number to set up the transfer, which can take the surprise element out of the gift. If theres a way to get the information from another family member, such as a parent or spouse, finding extra stock in an account could be an exciting gift for the recipient. If they dont already have an account, you could open and fund one for them as part of your gift.

    You can start the transfer process online in your own brokerage account. If you cant find the option online, contact your brokerage for assistance. Its super easy to make a transfer. Its a very seamless process, says Katzen.

    If you want to transfer a stock you dont already own, youll need to purchase it in your account before you transfer it to someone else, adds Stephen Akin, registered investment advisor at Akin Investments.

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    Set Up A Custodial Account For Kids

    Parents can set up a custodial brokerage account for their kids and transfer stocks, mutual funds, and other assets into it. They can also buy assets directly for the account. When the child reaches a certain age they take ownership of it.

    This can be a great way to get kids interested in their finances and educate them about investing or particular industries. Teaching kids about short and long term investments by giving them a stock that will grow over time is a great learning opportunity. However, keep in mind that there is a so-called kiddie tax imposed by the IRS if a childs interest and dividend income is more than $2,200.

    Giving Stock As A Gift: How To Gift Stock To A Child

    If youre thinking of giving stock to a child, there a few options for how to do so:

    • Purchase stock specifically for a child you can do that via a custodial account over which you have or another family member has control.
    • Give stock from an existing investment account contact your broker to help make the transfer electronically or by stock certificate.
    • Give stock with an app find an online app that allows you to give stock.

    In any case, the recipient should have a brokerage account to receive the stock. A minor child should have a custodial account, while an of-age child may have a regular account. While you could transfer the stock as physical certificates, its merely a novelty and pricey to do so, too.

    Either way, youll want to stay under legal thresholds that could cause tax headaches.

    You can safely give stock to a child under the annual gift exclusion, which allows individuals to give up to $15,000 annually to any number of recipients without incurring a gift tax. A married couple filing jointly can give up to $30,000 annually. To qualify for this years exclusion, you need to make the gift before the end of the calendar year. Otherwise, your gift will count toward next years exclusion.

    It can require time and paperwork to go through a broker, so if youre looking for a simpler way to gift stock, there are some online apps that can help. Two options include Public.com and Stockpile.

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    Longevity Of Your Gift

    If youre like most people, youve given gift cards, boxes of candy, toys, and other products as gifts, all of which seem to have a lifespan of a couple of months at best. However, a gift certificate and a stock certificate are two different things.

    When you give the gift of stock, youre giving something that has the potential to grow in value over time and to make quarterly or annual dividend payments to the person youre giving the gift to, ultimately giving the recipient a reason to hold onto that gift for the long haul.

    Giving stock lets you give a gift that lasts by providing ongoing value to the gift recipient.

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