How to Give Stocks as a Gift

Struggling to find the perfect gift? Don't sweat it! Gifting stock is a unique and thoughtful option for any occasion. Wondering How to Give Stocks as a Gift? It's easier than you think – you can purchase shares of a company on behalf of someone else. Not only is it a memorable present, but it also helps the recipient build wealth and potentially spark their interest in investing. Before you dive in, there are a few key things to consider for both you (the giver) and the recipient.

Can You Give Stock as a Gift? 

Yes! There are multiple methods that you can use to gift a share of stock to a recipient. Gifting a share of stock usually involves two steps. First, you’ll need to purchase the stock through an existing brokerage account, or you can open a brokerage account and fund the new account before buying the stock or shares of stock that you want to gift. After you’ve purchased the investment that you want to send to your loved one, you’ll initiate an electronic transfer to shift ownership of the stock from yourself to the person you’re giving the gift to.

Many brokers also now allow you to gift shares of stock to a recipient periodically. This means that it’s possible to set up a recurring gift on a set schedule that you choose, which can help compound the value of your gift over time. For example, you might set up an agreement with your broker to transfer a few shares of a child’s favorite corporation to their account each year on their birthday.

No matter how you decide to gift stock, your broker will require you to complete a written and signed authorization form providing the broker with explicit details on how and when shares should be transferred. Most brokers have a relatively straightforward form on their websites that you can submit to initiate your transfer. Your broker will likely ask you for the following information when initiating a transfer:

• Your brokerage account name and number
• Your address
• A description of the stock you’re transferring, including the number of shares, the company’s name, and the schedule you want to transfer stocks on
• The brokerage account name and number of the person you’re transferring shares to
• The Social Security number of the recipient

You’ll need to make sure that the recipient already has a brokerage account before transferring stocks to them. If you’re buying a stock for a child who is too young to open their own investment account, you have the option to set up a custodial account, which you’ll remain in control of until the child is old enough to take control of the account themselves.

If you’re transferring shares within a single brokerage (meaning that both you and the recipient have accounts with the same broker) this process will be very straightforward. However, if you and the recipient invest through different brokerages, you’ll need to finalize your transaction by contacting the firm that the recipient invests through to complete the transaction. You may need to provide additional information on your account and the specific transfer that you’re making to be sure that the stocks you’re sending make it to the right account. 

Which Stocks Make Great Gifts?

One of the great things about gifting shares of stock is that you can highly tailor your gift to the tastes of the recipient. Let’s take a look at a few ideas that you can use to start your search for a perfectly personalized stock investment.

For Kids

Many of the brands that kids love are publicly traded companies. Some examples of stocks that children might find exciting include the following.

• McDonald’s Corp (NYSE: MCD): One of the most well-known fast-food companies in the world, McDonald’s is the original creator of the Happy Meal, designed specifically to excite children.
• Roblox Corp (NYSE: RBLX): If your child has ever begged you to buy Robux as a gift, you might want to consider investing directly in Roblox itself.
• Walt Disney Co (NYSE: DIS): From princesses to superheroes, Disney is responsible for creating tons of media loved by kids and adults alike.

For Environmentalists

If you’re shopping for someone who loves the environment, you may want to consider stocks with a focus on reducing humans’ impact on the Earth.

• Tesla (NASDAQ: TSLA): Tesla is one of the world’s most well-known manufacturers of electric vehicles, which reduce the owners' need to consume fossil fuels.
• Beyond Meat Inc (NASDAQ: BYND): Beyond Meat is a food manufacturer that focuses on the production of plant-based meat substitutes.
• First Solar, Inc (NASDAQ: FSLR): As the name suggests, First Solar is a large-scale manufacturer of both residential and commercial solar panels.

For Tech-Lovers

Nearly every popular tech brand is a publicly traded company, allowing you to gift an investment directly in the company through shares.

• Alphabet, Inc (NASDAQ: GOOGL): Alphabet is a conglomerate holding company best known for its search engine, Google.
• Apple Inc (NASDAQ: AAPL): Another well-known tech company, Apple is responsible for some of the most popular handheld devices, including the iPhone and iPad.
• Microsoft Corporation (NASDAQ: MSFT): Microsoft is an American technology corporation producing everything from desktop computers to accounting software.

Worried that your options will be limited because you can’t afford to gift an entire share of Tesla stock? Most brokerages now allow you to invest in “fractional shares,” which are partial shares of companies that issue high-value stocks. You may even be able to invest a specific dollar amount, allowing the broker to calculate how many shares your investment can purchase. For example, you can place an order to buy $50 worth of Amazon stock—your broker will do the math on your behalf and calculate how many fractional shares you can buy at the current market rate.  

Tax Considerations for Stock Gifts

Stocks are considered by the IRS as property, which means that the recipient of your gift may be subject to taxes. There are two major taxes that apply to stock gifts.

• Gift taxes: According to IRS rules, the maximum gift amount an individual can receive without incurring tax penalties is $15,000, and the lifetime limit that one person can gift without considering tax consequences is $11.7 million. If the shares of stock that you’re gifting surpasses either of these value thresholds, the recipient will usually be responsible for paying gift taxes.
• Capital gains tax: If the recipient of the stocks you gift sells them at a profit, the sale may be subject to a capital gains tax. The specific tax rate the recipient will need to pay will vary depending on the difference between the initial purchase price of the stock and the selling price as well as how long the recipient was in control over the stock before selling.

If you believe that your gift might put your recipient in a position that they may need to make special tax considerations, it’s always a good idea to speak with a tax professional before you purchase the shares. 

Low-Cost Investments for the Recipient

If you’re planning on giving stocks to someone who does not have a current brokerage account, you may inadvertently be pushing the recipient to open an account with the broker you use to buy the shares. This makes it especially important to consider expenses like account maintenance fees and sale commissions when deciding where to open an account. Taking the time to compare fees and expenses will help both you and the person you’re gifting stock to save money. 

Compare Online Stock Brokers

No matter if you’re opening a brokerage account for yourself to buy your first share of stock or you’re creating a custodial account for a child, you should take your time and research your brokerage options before creating an account. Consider starting your search with the following online brokerage options.  

The Ultimate Present for Every Occasion

Another reason why stocks make great gifts? Unlike a toy or a new pair of shoes, stocks may increase in value over time. If you choose a stock that issues dividends, the person you’re gifting stock to could be enjoying benefits for life. However, opening and funding a brokerage account isn’t an instantaneous process. Start comparing brokerage accounts now to be sure that you’re ready to give before the holiday season ends. 

Compare brokerage accounts now and be prepared to give the perfect gift all year round.

Frequently Asked Questions