how do you gift someone a stock — step-by-step

How to Gift Stock

Gifting stock can be a thoughtful way to transfer wealth, teach financial literacy, or support a cause. If you searched for "how do you gift someone a stock," this guide gives clear, actionable steps, explains tax and legal implications, and shows practical options — from broker-to-broker transfers and custodial accounts to gifting apps and charitable donations. Read on to learn what you need, how long transfers take, and how to handle cost basis, taxes, and documentation.

Overview / Definition

Gifting stock means transferring ownership of share(s) in a publicly traded company or other securities from one person or entity to another. A gift can be an in-kind transfer of shares the giver already owns, or the giver can buy shares and then transfer them. Gifting typically uses brokerage accounts, custodial arrangements for minors, transfer agents, or newer stock-gifting platforms that issue gift certificates or fractional shares. The exact process depends on the parties involved, the security type, and the broker or transfer agent.

For readers who asked "how do you gift someone a stock," this section clarifies the two principal approaches: (1) transfer shares you already own directly into the recipient’s account (in-kind), or (2) purchase shares and then move them to the recipient. Each approach has administrative, tax, and timing differences that the rest of this article covers.

Reasons to Gift Stock

People gift stock for several common reasons:

• Long-term growth potential for the recipient: Transferring appreciated assets can give the recipient upside without forcing the giver to liquidate holdings.
• Tax and estate-planning advantages: Gifting can remove future appreciation from the giver’s estate and, within allowed limits, reduce estate-tax exposure. In some cases, donors may use annual gift exclusions to transfer value tax-efficiently.
• Financial education: Giving shares to children or young adults via custodial accounts teaches investing basics and long-term thinking.
• Charitable benefit: Donating appreciated stock to a qualified charity often avoids capital gains tax and can provide a charitable deduction (subject to tax rules), making stock donations a tax-efficient way to support causes.

As of Jan 1, 2025, according to the IRS, the annual gift tax exclusion per recipient is $19,000. This figure matters when deciding how much stock you can give without filing a gift tax return.

Who Can Receive Gifted Stock

Typical recipients include:

• Adults with brokerage accounts that accept transfers of stock.
• Minors via custodial accounts such as UGMA (Uniform Gifts to Minors Act) or UTMA (Uniform Transfers to Minors Act); an adult custodian manages the account until state-specified age of majority.
• Spouses: Transfers between U.S.-citizen spouses are usually treated favorably for tax purposes.
• Charitable organizations that accept securities as donations; charities must be able to accept stock and process transfers.

Special rules and practical points:

• Non-U.S. citizen spouses: Transfers to spouses who are not U.S. citizens may follow different reporting or limit rules — check tax guidance for cross-border gifts.
• Entities (LLCs, trusts, retirement accounts): Not all entities can receive gifts of securities without additional documentation; trusts often require trust paperwork and tax ID details.

Common Methods for Gifting Stock

Below are the common, practical methods people use to gift stock and how each works.

Transfer in-kind between brokerage accounts

This is the standard method when both giver and recipient have brokerage accounts. The giver instructs their broker to transfer specific shares to the recipient’s brokerage account without selling (an "in-kind" transfer). Required information often includes:

• Recipient’s full name as listed on their brokerage account.
• Recipient’s brokerage firm and account number.
• The security identifier (ticker and number of shares).
• If transferring between different broker-dealers, the recipient firm’s DTC number or firm name may be required.

Typical process:

1. Giver contacts their broker (online or by phone) and completes a transfer-of-assets or account transfer form.
2. The broker may request a signed authorization from the recipient or additional verification.
3. The receiving broker identifies and posts the shares to the recipient’s account once processed.

Processing times vary: same-broker transfers can be completed in 1 business day; transfers between firms commonly take 1–7 business days. Fees are rare for incoming transfers but some brokers charge outgoing transfer fees.

Buy-to-gift then transfer

In this approach, the giver buys shares in their account and immediately initiates a transfer to the recipient. This is useful when the giver wants to control the timing of purchase and gift. Key points:

• After purchase, follow the transfer-in-kind steps above and complete the transfer authorization.
• If you buy and transfer the same day, the trade settlement (usually T+2 for stocks) can affect the broker’s ability to transfer unsettled shares; check your broker’s rules.
• Keep documentation showing purchase date, price, and transfer confirmation for tax records.

Custodial accounts for minors (UGMA/UTMA)

Custodial accounts allow adults to gift securities to minors while retaining legal control of the assets until the minor reaches the age specified by state law (commonly 18–21). Important features:

• The custodian (parent, grandparent, or other adult) manages the assets for the child’s benefit.
• Once the child reaches majority, the account legally becomes the child’s property and cannot be taken back by the custodian.
• Parents and grandparents often use UGMA/UTMA accounts for gifts because they simplify taxation and brokerage acceptance of minors.

When you ask "how do you gift someone a stock" for a child, custodial accounts are usually the recommended legal vehicle.

Stock-gifting platforms and gift cards

Third-party platforms and apps have simplified gifting for non-investors. They let you buy a single share or fractional shares and deliver a gift certificate, email, or claim code the recipient redeems. Key advantages:

• Easy for beginners and non-account holders.
• Some platforms offer physical gift cards or digital certificates that explain the gift and how to claim it.
• Fractional-share gifting allows precise dollar-value gifts when full shares are expensive.

Limitations:

• The recipient may need to create an account with the same platform to redeem.
• Fees and tax paperwork vary; keep records of fair market value on the gift date.

If you use a Web3 wallet in combination with securities-related tokens, consider Bitget Wallet for custody and transfers where applicable.

Physical stock certificates and Direct Registration System (DRS)

Although rare today, gifting can involve physical certificates or registering shares directly in the recipient’s name via the Direct Registration System (DRS). Points to know:

• Physical certificates require signature guarantees for transfers and can add administrative and mailing steps.
• DRS registration means the transfer agent registers the shares in the recipient’s name on the company’s books; this avoids physical certificates but requires dealing with the transfer agent.
• Both methods are slower and more paperwork-heavy than broker transfers.

Gifting via dividend reinvestment plans (DRIPs) or fractional-share mechanisms

If a company or broker offers a DRIP or fractional-share service, you can arrange gifts in dollar amounts that buy fractional shares or enroll the recipient to receive dividends reinvested. This is useful for ongoing gifting or when full-share transfers aren’t convenient. Note:

• Fractional shares may be limited by broker policies.
• Cost basis and holding periods follow the donor’s basis rules (see Tax and Legal Implications).

Tax and Legal Implications

Understanding tax consequences is essential when you consider "how do you gift someone a stock." The laws change frequently, so always verify current rules and consult a tax professional.

Gift tax and annual exclusion

The U.S. tax code allows an annual exclusion amount per recipient; for 2025 the IRS annual exclusion is $19,000 per recipient. Gifts above that amount may require filing IRS Form 709, the United States Gift (and Generation-Skipping Transfer) Tax Return. There is also a lifetime exclusion amount that offsets gift taxes, but using it reduces your estate-and-gift exemption.

Important: filing a gift tax return does not automatically mean you owe gift tax — it may only be a reporting requirement.

(As of Jan 1, 2025, according to the IRS, the annual gift tax exclusion is $19,000.)

Cost basis and holding period carryover

When you transfer stock as a gift, the recipient generally inherits your cost basis (the giver’s original purchase price adjusted for splits and other events) and the holding period. This carryover basis affects the recipient’s capital gains computation when they sell.

For appreciated shares:

• If the recipient later sells, their capital gain equals the sale proceeds minus the giver’s cost basis.
• If the security has lost value, special rules may apply for determining basis for loss purposes.

Document the giver’s original purchase dates and prices so the recipient has accurate information for future tax reporting.

Capital gains consequences for the recipient

Once the recipient sells gifted shares, capital gains or losses are calculated using the carryover basis and holding period. The recipient is responsible for any resulting tax. Tax rates depend on the holding period (short-term vs. long-term) and the recipient’s tax bracket.

Because the recipient inherits the holding period, a gift of long-held stock may enable immediate long-term capital gains treatment when sold.

Charitable donations of stock

Donating appreciated publicly traded stock directly to a qualified charity generally avoids capital gains tax for the donor and may permit a charitable deduction for the fair market value at the time of donation, subject to IRS limits and substantiation rules. Always confirm a charity’s ability to accept stock and obtain a donation receipt for tax purposes.

Spousal transfers and special cases

Transfers between U.S.-citizen spouses are usually tax-free for gift-tax purposes. Transfers to noncitizen spouses can have different annual limits and reporting rules; check current IRS guidance for the applicable thresholds and procedures.

Practical Steps — What You Need and Typical Timeline

This section gives a practical checklist and describes typical brokerage procedures, timelines, and fees when you ask "how do you gift someone a stock."

Information the giver should collect

Before starting a transfer, gather:

• Recipient’s brokerage firm name and account number (or custodial account details).
• Recipient’s full legal name as registered with the brokerage.
• Exact security identification: ticker symbol, CUSIP if available, and number of shares to gift.
• Recipient’s contact information (email or phone) to coordinate any confirmation steps.
• If gifting to a trust or entity: tax ID and trust documents.

Brokerage procedures and forms

Brokers vary in their processes, but common steps include:

• Online transfer initiation: many brokerages support internal transfers via website forms.
• Transfer-of-assets form: used for sending assets between firms.
• Transfer agent communications: for DRS or certificate transfers the company’s transfer agent may be involved.
• Signed authorizations: some receiving brokers require the recipient to authorize acceptance.

As of Jan 1, 2025, according to major brokerage guidance, most in-broker transfers are completed within 1 business day, while ACAT transfers between firms typically take 1–7 business days depending on verification steps.

Processing timeframes and fees

• Same-broker transfers: commonly 0–2 business days.
• Between brokers (ACAT or DTC): normally 1–7 business days.
• Physical certificates or DRS: can take several weeks depending on mailing and agent processing.
• Fees: some brokers charge an outgoing transfer or certificate-handling fee; incoming transfers are usually free. Custodial accounts sometimes have maintenance fees.

Determination of value for tax and gifting limits

For gift-tax reporting, the fair market value (FMV) of the gift is measured on the date of the gift — generally the date the transfer is effective or the date the broker processes the transfer. Keep transaction records and confirmations showing the date and value used for reporting.

Considerations and Risks

Gifting stock produces benefits but also practical risks and consequences to consider.

Impact on income (dividends) and voting rights

After the transfer is effective, dividends and voting rights belong to the recipient. Timing matters: if a dividend record date or ex-dividend date is near the transfer, ownership timing determines who receives the dividend and who keeps voting power.

Kiddie tax and financial aid implications

Gifts to minors held in custodial accounts may be subject to the “kiddie tax,” which can tax a portion of a child’s unearned income at the parents’ tax rate. Additionally, custodial assets are considered the child’s assets for financial aid calculations and can reduce need-based aid eligibility. Consider these implications when gifting significant value to a child.

Recipient’s immediate sale and tax outcomes

Recipients can legally sell gifted shares immediately after receipt. If recipients sell right away, they assume any capital gains taxes. This possibility can create unexpected tax liabilities for the recipient, especially if the shares have a low cost basis for which they inherit the donor’s basis.

Estate-planning and removing future appreciation from estate

Gifting appreciated stock removes future appreciation from the donor’s estate, which can lower estate tax exposure. However, gifts may consume part of the donor’s lifetime gift-and-estate exemption. Also consider whether you prefer gifting now or retaining assets until death, where beneficiaries may receive a step-up in basis (note: tax law changes can affect these rules).

Examples and Typical Scenarios

These brief scenarios show typical steps and tax outcomes for common gifting situations.

1. Gifting appreciated stock to an adult relative

   • Situation: You own 100 shares of XYZ bought years ago at $10 per share, current market price $60.
   • Steps: Initiate an in-kind transfer to the relative’s brokerage account with their account number; confirm transfer date.
   • Tax: The relative inherits your $10 cost basis and your purchase date; if they sell later at $60, they pay capital gains tax on the $50 gain per share.

2. Setting up an UGMA account for a child

   • Situation: Grandparent wants to give $5,000 in stock to a 10-year-old.
   • Steps: Open an UGMA account at a brokerage (or transfer into an existing custodial account), purchase stock or transfer shares into the custodial account; grandparent documents the gift.
   • Tax and control: Custodian manages assets until state age of majority; some kiddie tax rules may apply.

3. Donating stock to charity

   • Situation: Donor holds long-term appreciated shares worth $20,000 and wants to support a qualified charity.
   • Steps: Coordinate transfer to the charity’s brokerage or request the charity’s transfer agent details; obtain a written receipt showing date and FMV.
   • Tax: Donor typically avoids capital gains tax and may take a charitable deduction for FMV subject to limits.

4. Buying a share via a gifting app for a friend

   • Situation: You want to give a $50 stock gift to a friend who is new to investing.
   • Steps: Use a gifting platform to purchase a fractional share and send a claim code or gift certificate; friend redeems by creating an account on the platform.
   • Tax: The platform’s records establish the gift date and value; the recipient inherits cost basis information once shares are in their account.

Step-by-Step Checklist for Givers

A concise, actionable checklist to follow when you decide to gift stock:

1. Choose the security and number (or dollar amount) to gift.
2. Confirm the recipient can accept securities (brokerage account, custodial account, or charity acceptance policy).
3. Collect recipient account details: firm name, account number, and recipient’s full name as registered.
4. Contact your broker to initiate an in-kind transfer or complete a transfer-of-assets form; if purchasing to gift, buy the security and then transfer.
5. If transferring physical certificates, secure signature guarantees and use insured mail or transfer agent procedures.
6. Track processing and confirm the recipient has received the shares.
7. Document the gift: transfer confirmations, FMV on the transfer date, and cost-basis records for tax purposes.
8. If required, file IRS Form 709 and other reporting documents when gifts exceed annual exclusion limits.

Frequently Asked Questions (FAQ)

Q: Do I have to sell the stock before gifting? A: No. You can gift stock in-kind between brokerage accounts without selling. Selling first and gifting cash is an option but may trigger capital gains for the seller.

Q: What happens to cost basis when I gift stock? A: The recipient generally inherits the giver’s cost basis and holding period. Keep accurate purchase records.

Q: Can I gift fractional shares? A: It depends on the broker or gifting platform. Some brokers and third-party services support fractional-share gifting; traditional brokerage transfer systems usually require whole shares.

Q: Are there gift limits? A: The IRS annual gift tax exclusion applies per recipient (for 2025, $19,000). Gifts above the exclusion may require Form 709. Consult a tax advisor for personal advice.

Q: How long does a transfer take? A: Same-broker transfers can clear in 0–2 business days. Transfers between different brokers usually complete in 1–7 business days. Physical certificate or transfer-agent transfers may take longer.

Additional Resources and Further Reading

For detailed forms, examples, and up-to-date guidance, consult brokerage help pages and authoritative tax resources. Useful topics to search for include broker transfer-of-assets forms, IRS gift tax guidance and instructions for Form 709, and brokerage-specific guides from established firms.

Suggested resources to read (no external links included here):

• IRS guidance on gift taxes and current exclusion amounts.
• Broker help pages for transfer procedures and fees (search your broker’s site for "transfer of assets" or "ACAT").
• Educational guides from Vanguard, Fidelity, Charles Schwab, NerdWallet, Investopedia, and Kiplinger.

Also consider consulting a tax advisor or estate-planning attorney to confirm the tax and legal details for your situation.

Notes and Disclaimers

This article provides general informational content and does not constitute tax, legal, or investment advice. Tax laws and gifting limits change over time; confirm current figures (for example, annual exclusions and filing thresholds) directly with official sources. For personalized recommendations, consult a qualified tax advisor or attorney.

As of Jan 1, 2025, according to the IRS, the annual gift tax exclusion is $19,000. As of Jan 1, 2025, brokerage processing expectations reported by major firms indicate most in-house transfers are completed quickly, while inter-firm transfers commonly take up to 7 business days. Readers should verify these figures with current official guidance.

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Ready to gift? If you use a trading or custody product, consider Bitget and Bitget Wallet for secure custody and transfers where supported. Explore Bitget’s help center or contact support to learn how Bitget handles in-kind transfers and custodial setups.