How to Gift Stock: 8 Ways to Send Stock As A Gift | SoFi

Stocks are a unique endow that have the potential to keep on giving over clock. They can be given to syndicate members, friends, charities, and others. Gifting banal is easy to do and can have benefits for both the giver and the receiver—though it ’ south worth noting there can be tax implications for the liquidator .

8 Ways to Gift Stocks

There are several ways that stocks can be gifted .

1. Set Up a Custodial Account for Kids

Parents can set up a custodial brokerage account for their kids and transfer stocks, common funds, and early assets into it. They can besides buy assets immediately for the report. When the child reaches a certain age they take ownership of it.

This can be a great direction to get kids concern in their finances and educate them about investing or detail industries. Teaching kids about light and long term investments by giving them a malcolm stock that will grow over time is a great learn opportunity. however, keep in judgment that there is a alleged “ kiddie tax ” imposed by the IRS if a child ’ south interest and dividend income is more than $ 2,200 .

2. Set up a DRiP

Dividend Reinvestment Plans, or DRiPs, are another option for gifting stocks. These are plans that mechanically reinvest dividends from stocks, which allows the stock to grow with compound pastime .

3. Gifting to a Spouse

When gifting stocks to a spouse, there are broadly no tax implications equally hanker as both people are U.S. citizens. A spouse can either gift a present interest or a future interest in shares, meaning the recipient role spouse gets the shares immediately or at a specify date in the future .
According to the IRS, If the recipient spouse is not a U.S. citizen, there is an annual giving tax excommunication of $ 159,000. Any measure above that would be taxed .

4. Virtual Transfers and Stock Certificates

Anyone can transfer shares of stock to person else if the recipient has a brokerage explanation. This type of endow can be done with basic personal and account information. One can either transfer shares they already own, or buy them in their account and then transfer them. Some brokers besides have the option to gift stocks sporadically .
Individuals can besides buy a stock certificate and gift that to the recipient, but this is expensive and requires more campaign for both the giver and receiver. To transfer a physical stock security, the owner needs to sign it in the presence of a guarantor, such as their bank or a stock broker .

5. Gifting Stock to Charity

Another option is to give the endow of stocks to a charity, arsenic farseeing as the charity is set up to receive them. This can benefit both the donor and the charity, because the giver doesn ’ deoxythymidine monophosphate have to pay capital gains taxes, and as a tax-exempt security entity, the charity doesn ’ t either. The donor may besides be able to deduct the amount the stock was deserving from their taxes .
For givers who don ’ t know which charity to give to, one option is a donor-advised fund. While the donor can take a tax subtraction on their endowment in the calendar year in which they give it, the fund will distribute the endowment to the charities over multiple years .

6. Passing Down Wealth

Gifting stocks to family members can be a better means to transfer wealth than selling them and paying taxes. For 2021, up to $ 15,000 per year, per person, can be transferred through give of cash, stocks, or a combination. This means a couple can gift $ 30,000 to one individual, absolve of the give tax .
If a person wants to transfer stocks upon their death, they have a few options, including :
• Make it separate of their will .
• Go through a beneficiary designation in a trust .
• Create an familial IRA .
• Arrange a transfer on death appellation in a brokerage explanation .
It ’ mho authoritative to look into each option and one ’ s individual circumstances to figure out the taxes and cost footing for this choice .

7. Gifting Through an App

Another option is to find an endow app that has stock endow features .

8. Gift Cards

It may be surprising to hear, but stocks can be given via giving cards. These may be physical or digital gift cards .

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The Benefits of Gifting Stocks

There are respective upsides to giving ( and receiving ) stocks :
• If you ’ re giving the giving of stocks to kids, it can begin their investing education and provide them with an asset that will grow over time .
• For anyone receiving lineage, there ’ s potential that the value of the endowment will grow over time. ( Though it must be said, the value could besides diminish over time. )
• If the donor already owns stock in the party, they may benefit on their taxes by transferring some or all of that stock to person else. If a stock certificate has appreciated in measure, the owner would normally owe capital gains if they sell it. however, if they gift it, they don ’ t have to pay the taxes. Those gains do get transferred to the receiver—but depending on their tax bracket, they won ’ t owe any taxes when they sell. In that sheath, both the giver and liquidator would avoid paying the capital gains .
Recommended: How to Buy Fractional Shares

Things to Consider When Giving a Stock Gift

Gifting stocks is relatively square, but there are some things to keep in mind. In summation to the $ 15,000 per year endow limit and the capital gains tax implications of endow, time of gifts is crucial, and gifting may not always be the best choice .
For case, when gifting to heirs, it may be better to wait and allow them to inherit stocks quite than gifting them during life. This may reduce or eliminate the capital gains they owe .
besides, there is a life give ejection for federal estate taxes, which was $ 11.58 million in 2020, which can be used to shelter giving that goes over $ 15,000. however, this is not a big tax option, due to the ways gifts and inherit stocks are taxed .
broadly a better manner to give a substantial sum of money to person is to establish a reliance fund .

Tax Implications of Gifting Stocks

There are some tax ramifications of giving stock as a endow .

Capital Gains Tax

There are a few things to be mindful of with the capital gains taxes. If the breed is gifted at a lower value than it was primitively purchased at, and sold at a loss, the cost basis for the recipient is based on the honest market value of the stock on the date they received it .
however, if the price of the neckcloth increases above the price that the giver in the first place paid, the capital gains are based on the prize of the livestock when the donor bought it. In a third scenario, if the stock is sold on the date of the giving at a higher than carnival marketplace prize, but at a lower value than the giver ’ s monetary value basis, no gain or loss needs to be recorded by the recipient .
Tax implications for giving: When gifting stocks, the donor can avoid paying das kapital gains tax. can sometimes be a way for the donor and the receiver to avoid paying capital gains taxes .
Tax implications for receiving: The recipient won ’ t yield taxes upon receiving the stock. When they sell it, they may be exempt from capital gains taxes if they ’ re in a lower tax bracket ( consider, for model, a child or withdraw individual ). differently, if they sell at a profit, they should expect to pay capital gains tax. If the annual give limit is exceeded, there may be taxes associated with that and the giver will need to file an estate and giving tax reappearance .
Recommended: What Are Capital Gains Taxes?

The Takeaway

Gifting stocks is a singular idea that may have benefits for both the donor and the receiver. As you plan for your future, you may decide to build up a portfolio of stocks that you intend to give to your children, parents, or others as you grow older .
You can easily start investing on-line with SoFi Invest®. The app lets you cursorily buy and sell stocks right from your earphone. You can besides research and track specific stocks, and see all of your investing data in one childlike dashboard .

Find out how to get started with SoFi Invest.

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