How to gift stocks to someone

How to gift stocks to someone

Gifting securities can be a powerful way to transfer wealth, teach investing, or support a cause. This guide explains how to gift stocks to someone — which means transferring ownership of publicly traded shares to another person or entity — and it shows practical options, tax basics, operational steps, and best practices so you can act with confidence.

As of 2025-12-31, according to InvestmentNews reporting, many brokerages and custodial platforms continue to refine stock gifting workflows and tools to simplify transfers and charitable donations. Check your broker for the latest procedures and processing times before you start.

Why read this article: within a single, practical guide you will learn when gifting stock is preferable to cash, the primary legal and tax considerations, the step‑by‑step mechanics for common gifting methods, how long transfers typically take, and real examples you can adapt. The content is beginner friendly, neutral, and recommends consulting tax and legal advisers for large or complex gifts. For digital custody and wallet recommendations, this guide references Bitget and Bitget Wallet where appropriate.

Important note: tax rules and annual gift limits change over time. Always verify current IRS or local rules and your brokerage’s processes before you make a gift.

Overview and benefits of gifting stocks

Gifting stock means transferring legal ownership of publicly traded shares to a recipient. People choose to gift shares for several reasons:

• Potential for long‑term growth: gifting shares rather than cash lets the recipient participate in future appreciation.
• Tax planning: transferring shares can defer or avoid the donor realizing capital gains if the donor wants to reduce taxable events.
• Estate planning: lifetime gifts reduce the size of a taxable estate for some donors.
• Education: giving a child or young adult a single share is a way to teach investing and financial responsibility.
• Charitable giving: donating appreciated stock directly to a charity can be tax‑efficient for donors.

When might you prefer to gift stocks rather than give cash? If you hold low‑cost, highly appreciated shares and want to avoid realizing capital gains; if you want the recipient to benefit from future dividends or growth; or if your goal is tax‑efficient philanthropy. Gifting stock also creates a tangible teaching moment for younger recipients that cash sometimes does not.

This guide explains practical ways to make those gifts, what the recipient receives, and the tax mechanics that follow.

Key legal and tax considerations (high‑level)

Before you transfer shares, evaluate these core legal and tax points:

• Annual gift tax exclusion: many jurisdictions set an annual gift exclusion that allows donors to give up to a limit per recipient without using unified credit. Check current IRS limits for U.S. taxpayers and your local rules if you are outside the U.S.
• Gift‑tax reporting: for U.S. donors, gifts above the annual exclusion may require filing Form 709. Filing does not always mean tax is due, but it reports the gift against lifetime exemptions.
• Cost basis and holding period: for lifetime gifts, recipients generally receive the donor’s cost basis and holding period for capital gains calculations (there are special rules when the recipient later sells at a loss). For inheritances, basis rules are different (see later section).
• Gifts vs inheritances: inheritances commonly receive a step‑up in basis to the asset’s fair market value at death; lifetime gifts do not. Estate tax rules also differ from gift tax rules and may affect planning.
• Securities law and transfer restrictions: check that the shares you hold are transferable (some restricted or unregistered securities may have transfer limitations).
• Consult advisers: because tax consequences and legal effects vary by jurisdiction and personal circumstances, consult a tax or estate adviser for significant or complex gifts.

Who can receive gifted stock

Common recipients include:

• Adult individuals: any adult with a brokerage or investment account that accepts transfers can receive gifted shares.
• Minors via custodial accounts: minors cannot hold brokerage accounts in their own name in many jurisdictions. Custodial accounts (UGMA/UTMA in the U.S.) allow an adult custodian to hold assets for the child until they reach majority.
• Charities: qualifying tax‑exempt charities can accept transfers of publicly traded stock, often with specific broker or transfer instructions.
• Trusts: revocable or irrevocable trusts can be named as recipients for estate or control objectives.
• Spouses: spouses commonly receive gifts; depending on jurisdiction, gift attribution rules may apply.
• Foreign/international recipients: transfers to recipients in other countries are possible but add cross‑border complications.

High‑level restrictions:

• Retirement accounts (IRAs, 401(k)s) generally cannot be gifted directly; assets inside those accounts have tax and distribution rules that differ from regular brokerage assets.
• Some brokers will not accept transfers to custodial accounts or charities without specific documentation; check your broker’s policies.

Methods to gift stocks (practical options)

Below are the most common, practical methods for transferring shares.

In‑kind transfers between brokerage accounts

An in‑kind transfer moves shares from the donor’s brokerage account to the recipient’s brokerage account without selling. Key points:

• If both parties use the same brokerage, internal transfers are usually fastest (often 1–3 business days).
• If different brokerages are involved, transfers commonly use ACAT (Automated Customer Account Transfer) or DTC transfers. These can take longer (several business days up to two weeks depending on firms and whether paperwork is complete).
• Typical information required: donor account name; recipient account name and account number; receiving firm DTC number or transfer department details; the number and ticker of shares to transfer.
• Confirm whether partial shares are supported by the receiving account. Some brokerages do not accept fractional shares in transfers.
• Communicate cost basis information to the receiving broker so capital gains are tracked correctly.

This is the most common approach when you want to transfer existing holdings without triggering a sale.

Transfer via broker paperwork

Many brokerages require written authorization for gifts. Common steps:

• Request the donor transfer form or gift of securities form from your brokerage.
• Complete all fields: donor and recipient details, number of shares, reason (gift), and signature(s).
• Some transfers of paper certificates or high‑value transfers require notarization or a medallion/signature guarantee (see below).
• The broker will process the transfer and send confirmations to you and the recipient.

Every firm has unique forms and acceptance rules; ask your broker for their exact process.

Transfer on Death (TOD) / Payable on Death (POD) designations

A Transfer on Death (TOD) registration lets an owner name a beneficiary to receive assets at death without probate. Key differences vs gifting during life:

• A TOD is not an immediate gift — ownership transfers only upon the donor’s death.
• TOD avoids probate for the designated asset, providing a simple way to pass shares to heirs.
• Because the transfer occurs at death, beneficiaries often receive a step‑up in basis (in many jurisdictions), unlike lifetime gifts.
• TOD registrations vary by state and broker rules; confirm how your broker handles TOD registrations and beneficiary forms.

Use TOD if your goal is to simplify an inheritance rather than make a lifetime gift.

Custodial accounts for minors (UGMA/UTMA)

To gift stock to a minor, many donors use custodial accounts (UGMA/UTMA in the U.S.). Basics:

• An adult (custodian) opens the account for the child (beneficiary) and transfers or purchases shares in that account.
• The custodian manages the investments until the child reaches the legal age of majority (often 18 or 21 depending on state rules).
• Once the beneficiary reaches the age of majority listed for the account, control passes to the beneficiary and cannot be reversed.
• Gifts to custodial accounts are irrevocable: the assets belong to the child and must be used for the child’s benefit.

Custodial accounts are a common way to gift shares for educational or long‑term savings goals while keeping simple recordkeeping and low cost.

Gifting stock to charities

Donating appreciated publicly traded stock directly to a qualified charity can be tax‑efficient:

• Donors typically avoid capital gains tax on the appreciated portion; the charity receives the full value of the shares.
• Donors may be eligible for a charitable deduction equal to the fair market value of the stock at transfer (subject to limits and rules in your jurisdiction).
• Charities usually provide transfer instructions (broker details, DTC or account numbers, contact person). Some charities accept transfers through brokers or donor‑advised funds.
• For large donations, confirm the charity’s policy and get written acknowledgment for tax purposes.

Gifting appreciated stock to charity is often more favorable than selling the shares and donating the after‑tax cash.

Gifting physical stock certificates

Paper stock certificates are less common but still transferable. Steps and cautions:

• The donor endorses the back of the certificate or completes a stock power form.
• Many transfer agents require a medallion/signature guarantee rather than a simple notarization to prevent forgery and protect holders.
• The recipient often must deposit the certificate into a brokerage account that will handle the transfer with the issuing company’s transfer agent.
• Expect longer processing times and potential fees when dealing with paper certificates.

If you hold physical certificates, contact the issuing company or your broker for exact transfer steps and guarantee requirements.

Buying stock in the recipient’s name

Instead of transferring existing shares, you can buy shares and place them directly into an account owned by the recipient. Considerations:

• You create a new gift by purchasing in the recipient’s account; you will not retain control of those shares.
• This method is simple when you cannot transfer in‑kind or prefer to avoid transferring basis complications.
• For minors, you can buy shares into a custodial account you control until they reach majority.

This approach is straightforward when the recipient needs a funded account and you prefer to purchase new shares rather than move existing positions.

Gift cards, fractional shares, and brokerage gift features

Modern brokerages and custodial platforms offer gift features:

• Brokerage gift cards or e‑gifts let you buy fractional shares or credits that the recipient redeems in their account.
• Fractional‑share gifting enables you to give a dollar amount instead of a full share, which is handy for high‑priced stocks.
• Some gift products require the recipient to open an account at the same firm; others allow external transfers.

Pros: accessible, low‑cost, convenient for small gifts. Cons: may lock recipient to a specific brokerage for redemption and can complicate basis tracking.

Gifting via trusts or estate planning vehicles

For complex objectives — control over timing, income, or succession — trusts and estate vehicles are useful:

• Irrevocable trusts can remove assets from your estate and set terms for distribution to beneficiaries.
• Grantor retained annuity trusts (GRATs), charitable remainder trusts, and other specialized vehicles have distinct tax and control features.
• Trust transfers often require coordination with attorneys, trustees, and brokers.

Use trusts when you have multi‑year planning goals or large holdings that require formal control mechanisms.

Cost, timing, and operational details

Processing times and costs vary by method and firms involved:

• Same‑broker in‑kind transfers: typically 1–3 business days once paperwork is complete.
• Transfers between different brokerages (ACAT/DTC): commonly several business days to two weeks, depending on firm responsiveness and whether medallion guarantees are needed.
• Paper certificates: can take several weeks and usually require additional steps and fees.
• Fees: many brokerages offer free internal transfers, but some charge outgoing transfer fees, medallion guarantee fees, or account closure fees. Charities may have brokerage accounts that accept transfers with minimal fees.
• Minimums and partial shares: some firms will not accept fractional shares in transfers. If you must transfer partial shares, confirm acceptance in advance.
• Documentation the recipient should receive: transfer confirmations, trade confirmations if any sale occurs, and cost basis information. Donors should also retain proof of the gift (brokerage statements or transfer receipts).

Operational best practice: start early, request exact transfer instructions from both donor and recipient brokers, and get written confirmations of basis and transfer completion.

Tax mechanics in detail

Gift tax annual exclusion and reporting

• Annual exclusion: many jurisdictions allow an annual per‑recipient exclusion limit that excludes gifts up to that amount from gift tax and reporting requirements. For U.S. taxpayers, the IRS publishes the annual exclusion each year—check current IRS limits before gifting.
• Form 709 (U.S.): donors who give more than the annual exclusion to any one recipient in a calendar year may need to file Form 709 to report the excess. Filing does not automatically mean tax is due, because gifts above the annual exclusion may be offset by the lifetime exemption.
• Spousal attribution and split gifts: married couples may elect to split gifts to double the annual exclusion treatment, but this can involve additional reporting rules.
• State rules: some states have separate gift or inheritance tax rules; consult a tax adviser.

Always verify current IRS guidance for the tax year in which you make the gift.

Cost basis and holding period rules

For lifetime gifts of publicly traded stock (U.S. context explained for clarity):

• Carryover basis: the recipient generally receives the donor’s cost basis (the price the donor originally paid) for determining capital gains on a later sale.
• Holding period carries over: the recipient inherits the donor’s holding period for purposes of determining short‑term vs. long‑term capital gains.
• Special rule when FMV < donor basis: if the fair market value (FMV) at the time of gift is less than the donor’s basis and the recipient later sells at a loss, special dual‑basis rules can apply—seek tax advice for loss situations.

Because the recipient inherits the donor’s basis, donors do not realize a taxable gain at the time of the gift. The recipient pays capital gains tax (if any) when they sell, based on the transferred basis and holding period.

Capital gains consequences for recipient

• When the recipient later sells the gifted shares, capital gains (or losses) are calculated using the donor’s basis (subject to special rules noted above).
• The holding period determines whether gains are short‑term or long‑term; long‑term typically receives preferential tax rates in many jurisdictions.
• Recipients with lower tax brackets can benefit if the donor transfers appreciated shares to them and they eventually sell at lower rates (but beware of tax avoidance rules that can reassign taxable income in some cases).

Gifts to charities

• Donating appreciated publicly traded stock directly to a qualified charity generally allows the donor to avoid capital gains tax on the appreciation and claim a charitable deduction for the fair market value of the gift (subject to limits). Check current tax law for deduction caps and rules.
• Selling the shares and donating cash often creates a capital gains event that reduces the net benefit to the charity and donor.
• For donations to donor‑advised funds or private foundations, rules vary; consult a tax adviser.

Differences between gifted and inherited stock

• Lifetime gift: recipient typically takes donor’s cost basis and holding period (carryover basis), which can leave built‑in capital gains exposure for the recipient.
• Inheritance: many jurisdictions (including the U.S.) provide a step‑up in basis at death, so heirs may receive a basis equal to the asset’s fair market value at the decedent’s death, potentially reducing future capital gains tax liability.
• Estate tax: large estates may face estate tax consequences that differ from gift tax treatment; careful planning is required for high‑value holdings.

Practical step‑by‑step checklist for making a gift

Use this concise procedural checklist when you decide how to gift stocks to someone:

1. Decide whether to gift existing shares (in‑kind) or buy new shares in the recipient’s account.
2. Confirm the recipient’s account type and details (broker name, account number, registration name). If recipient is a minor, confirm custodial account details (UGMA/UTMA or local equivalent).
3. Contact your broker to request the correct gift/transfer form and instructions. Ask whether medallion/signature guarantees are required.
4. Complete and sign required paperwork, provide identification, and secure any witness or guarantee services per your broker’s policy.
5. Provide accurate cost basis and acquisition date information to the receiving broker so the recipient’s records are complete.
6. Track the transfer with your broker and the recipient. Expect internal transfers in 1–3 business days; external ACAT/DTC transfers may take longer.
7. Get written confirmations: donor should keep the transfer confirmation and the recipient should confirm receipt and basis reporting.
8. If the gift is sizable, consult a tax or estate adviser and consider filing Form 709 (if required) and any local reporting.

Special scenarios and examples

Here are short, practical examples of common use cases for how to gift stocks to someone.

• Example 1: Gifting a single share to start a child’s investing. You buy one share and deposit it in a custodial UGMA account in the child’s name. The custodian explains the account rules and monitors the position until the child reaches the age of majority.

• Example 2: Transferring appreciated shares to a lower‑bracket family member. You transfer 100 shares in‑kind to an adult child’s brokerage account. The child receives your cost basis and holding period. When the child later sells, they pay capital gains tax according to their bracket—this can reduce the tax burden compared with you selling at a higher bracket, but be mindful of attribution or gift‑splitting rules.

• Example 3: Donating highly appreciated shares to charity. You transfer shares directly to a qualified charity using the charity’s broker transfer instructions. You avoid realizing the capital gain and may claim a charitable deduction for the FMV of the shares (subject to limits).

• Example 4: Same brokerage vs between brokers. If you and the recipient share the same broker, request an internal gift transfer and expect rapid processing. If different brokerages are involved, initiate an ACAT transfer and allow extra processing time.

• Example 5: Using a trust for control. You place shares into an irrevocable trust to set distribution terms and potentially reduce estate tax exposure. Work with an estate attorney to structure trustee powers and tax reporting.

Risks, pitfalls, and best practices

Common mistakes and warnings when gifting stock:

• Unexpected tax consequences for recipient: because the recipient inherits basis, a large appreciation can create significant capital gains upon sale.
• Gift tax surprises: heavy gifting in one year can trigger gift‑tax reporting or use up lifetime exemptions; understand annual exclusion amounts before large transfers.
• Loss of control: once you gift shares outright, you no longer control how they are sold or used.
• Retirement accounts: you generally cannot gift shares from retirement accounts directly; distributions from retirement accounts have distinct tax rules.
• Transfer delays or rejections: incomplete paperwork, missing medallion guarantees, or restrictions on certain securities can delay or block transfers.
• Inadequate documentation: failure to transmit basis and acquisition date can create headaches and incorrect tax reporting for the recipient.

Best practices:

• Document every step: keep transfer confirmations, broker forms, and basis worksheets.
• Communicate with the recipient: confirm account details and the recipient’s understanding of tax mechanics.
• Use custodial accounts for minors and trusts for complex or conditional gifts.
• Consult qualified tax and legal advisers when gifts are large, involve restricted securities, or cross borders.
• Consider using modern custodial or gifting features on platforms like Bitget to simplify fractional shares or gift credit arrangements while ensuring basis records are clear.

International and cross‑border considerations

Gifting across borders adds complexity:

• Tax treaties: double‑taxation or reporting obligations may apply depending on donor and recipient jurisdictions.
• Foreign brokerage restrictions: some brokerages restrict transfers to or from foreign accounts; currency conversion and foreign exchange implications may apply.
• Withholding and reporting: some countries require withholding on certain transfers or have reporting rules for gifts.
• Legal recognition of gifting documents: requirements for notarization, translation, or apostille may apply for international transfers.

If the recipient lives outside your country, consult a cross‑border tax specialist and contact both brokerages for exact instructions.

Frequently asked questions (concise answers)

Q: Can I gift partial shares? A: It depends on the receiving firm. Some brokerages accept fractional shares; many traditional transfers do not. Check the recipient broker’s policy before initiating the transfer.

Q: Who pays taxes when stock is gifted? A: Donors may have gift‑tax reporting obligations; recipients generally pay capital gains tax when they sell the gifted shares based on the donor’s basis. Consult tax rules in your jurisdiction.

Q: Can I gift stocks in an IRA or other retirement account? A: Generally no. Retirement accounts have distribution rules; you cannot directly transfer assets held inside most retirement accounts as gifts without triggering distribution rules and tax consequences.

Q: How do I prove when I gifted the shares? A: Keep brokerage transfer confirmations, dated gift forms, account statements showing the transfer, and written correspondence. Those documents establish the date and nature of the gift.

Q: What is a medallion guarantee? A: A medallion signature guarantee is a special verification used by transfer agents and brokerages to prevent unauthorized transfers. Banks or brokerages that offer medallion guarantees will verify the signer’s identity and authority.

Q: Should I sell appreciated stock and gift cash instead? A: In many cases donating appreciated stock directly to a charity is more tax‑efficient than selling and donating cash, because you can avoid capital gains. For gifts to individuals, selling first changes who pays capital gains tax. Consult a tax adviser.

Q: Can I reverse a gift? A: Generally, no. Lifetime gifts are typically irrevocable once the recipient has clear title. Use trusts or conditional arrangements if you need control.

See also / related topics

• Custodial accounts (UGMA/UTMA)
• Gift tax (U.S.) and annual exclusion rules
• Estate planning and trusts
• Donation of appreciated assets
• Transfer on Death (TOD) designations
• Brokerage transfer processes (ACAT/DTC)

References and further reading

Sources and practical guidance consulted in preparing this article (seek broker‑specific and tax‑year specific updates before acting):

• Vanguard — How to gift stock (practical transfer steps and brokerage requirements)
• NerdWallet — How to Gift Stock / How to Give Stock as a Gift (how‑to and tax notes)
• Kiplinger — How Do I Gift Stocks? (benefits and tax considerations)
• The Motley Fool — How to Gift Stock (methods and practical guidance)
• SoFi — How to Gift a Stock (methods, custodial accounts, gift options)
• Investopedia — Gifted Stock: Definition, Process, and Tax Implications (definitions and tax mechanics)
• InvestmentNews / SmartAsset — additional tax and procedural commentary

As of 2025-12-31, according to InvestmentNews reporting, brokerage firms continue to streamline gifting features and custodial solutions, but procedures and processing times still vary by firm—confirm your broker’s current instructions before initiating a gift.

Note: tax rules and gift limits change over time. Confirm current IRS rules, brokerage‑specific steps, and consult qualified tax or legal counsel for large or complicated gifts.

Final notes and next steps

Gifting stock is a flexible tool for transferring wealth, teaching investing, and maximizing charitable impact. If you are ready to proceed, start by contacting your broker and the recipient to confirm account details and transfer requirements. For custody and wallet needs, consider Bitget Wallet for custody and transfer convenience and explore Bitget’s platform features for managing securities gifts and custodial arrangements.

For further help: contact a qualified tax adviser or estate attorney for personalized guidance, and check your brokerage’s current gift transfer procedures and fees.

Explore Bitget services and Bitget Wallet to learn how modern platforms can simplify gifting, fractional shares, and custodial transfers. Act early, document thoroughly, and seek professional advice for complex or cross‑border gifts.