Gifting stocks can be a great idea. Whether you give one share, 100 shares, or even more, gifting a stock can help loved ones build their wealth. It can also be an ideal way to donate to the charity of your choice.
Ways to Gift Stocks
Stock Certificate Transfer:
You can transfer a physical stock certificate and give it to the recipient. But you likely can’t just hand it over. You might need to sign it over the recipient in the presence of a witness, like a broker or banker.
Brokerage Account Transfer:
You can transfer stock electronically from your account if your recipient has a brokerage account and you have the necessary details. There could be transaction fees or brokerage costs involved with the transfer.
Implications, Rules and Taxes
For the Recipient:
An important consideration is that children can’t own assets outright. To gift stocks to minors requires setting up a custodial account. Additionally, gifted stocks could trigger tax liabilities for both children and adults. Unearned income including that from dividends could be subject to taxation. Additionally, when the recipient sells the stock, they pay taxes on the capital gains. There are also considerations for gifting to a charity.
For the Giver:
When you gift your stock, you turn over tax liabilities to the recipient. And if you gift stock to a
charity, you can deduct the total value of that stock on your itemized tax return. But there are financial limits on how much you can give without having to report the amount to the IRS – the 2023 limit is $17,000. Gifting above that amount could trigger a gift tax.
It’s important to understand the potential implications of what you decide to give as a part of your estate plan. To determine if gifting stocks is an option for you and your loved ones, contact the office to discuss what makes sense for you.
This material was developed and prepared by a third party for use by your Registered Representative. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. The content is developed from sources believed to be providing accurate information.
For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera nor any of its representatives may give legal or tax advice.