how to gift someone stock: guide

How to gift someone stock

Giving shares can be a tax-efficient and meaningful way to transfer wealth, teach financial literacy, or support a cause. This article explains how to gift someone stock — focusing on traditional securities held in U.S. brokerage accounts — and walks through the motivations, methods, required paperwork, tax rules, timelines, and practical tips you need to complete a stock gift smoothly. Note: this article does not cover gifting cryptocurrencies; crypto gifting has different mechanics and custodial concerns (for web3 wallets, consider Bitget Wallet documentation).

As of 2025-12-31, according to IRS guidance and major brokerage help centers, rules for gifting securities, cost basis carryover, and annual exclusions remain central to planning and recordkeeping for gifts of stock.

Overview and motivations

People ask how to gift someone stock for many reasons. Common motivations include:

• Long-term growth potential: gifting shares gives the recipient exposure to appreciation and dividends over time.
• Tax planning: donating appreciated stock to charity can avoid capital gains tax for the donor; gifting to family can shift future capital gains to another taxpayer.
• Transferring wealth: moving assets to heirs or beneficiaries before death helps with estate planning.
• Teaching financial literacy: parents and guardians often gift stock to minors to introduce investing concepts.
• Charitable donations: nonprofits generally accept stock gifts and may provide tax receipts.

When you consider how to gift someone stock, weigh the legal and tax tradeoffs for both donor and recipient. Donors may face gift tax reporting if gifts exceed annual exclusion amounts. Recipients inherit the donor’s cost basis and holding period (carryover basis), which affects future capital gains tax when they sell. For minors, the kiddie tax and effects on financial aid are important. Always plan the gift timing (calendar year) and document the transfer.

Ways to gift stock (methods)

There are several primary methods to give stock. Each fits different scenarios such as gifting to an adult, transferring to a minor, donating to a charity, or planning an estate transfer.

In-kind broker-to-broker transfer (electronic transfer)

One common approach to how to gift someone stock is to transfer existing shares electronically from the giver’s brokerage account to the recipient’s brokerage account. This is typically done via broker transfer forms and uses transfer systems like the Automated Customer Account Transfer Service (ACATS) or DTC (Depository Trust Company) settlement rails.

Key points:

• Advantage: Because the stock is transferred "in kind," the donor does not sell the shares and therefore does not realize capital gain for tax purposes at the time of transfer.
• Typical process: the donor completes a transfer form with their broker, supplies the recipient’s account details, and signs required authorizations. The receiving broker and delivering broker coordinate the ACATS/DTC transfer.
• Common requirements: matching registration (exact name spelling), recipient account acceptance, and sometimes medallion guarantees for physical certificates.

This method is widely used when both parties already have brokerage accounts and when the donor wants to avoid triggering a taxable sale.

Buying shares directly in the recipient’s account

Another route for how to gift someone stock is to purchase shares and place them directly into the recipient’s brokerage account at the time of purchase.

Key points:

• Requires the recipient’s brokerage account number and often tax ID (SSN or EIN) for account servicing and reporting.
• Eliminates some paperwork associated with transferring existing positions.
• Useful when transferring fractional shares, depending on the broker’s support for fractional ownership.

This method can be faster for first-time gifts if the recipient already has an active account and you have the necessary account information.

Custodial accounts for minors (UGMA/UTMA)

When learning how to gift someone stock to a child, custodial accounts like UGMA (Uniform Gifts to Minors Act) or UTMA (Uniform Transfers to Minors Act) are the standard route in most U.S. states.

Key points:

• Legal ownership: assets in an UGMA/UTMA account are owned by the minor but managed by a custodian (usually a parent or guardian) until the child reaches the state-defined age of majority.
• Age thresholds: the age when control transfers to the minor varies by state (commonly 18 or 21, sometimes older under UTMA).
• Taxation: unearned income may be subject to the kiddie tax rules; small amounts of investment income may be taxed to the child at favorable rates.

Custodial accounts are appropriate for gifts intended to benefit a minor but require careful communication about future control.

Trusts and transfer-on-death (TOD) designations

For controlled transfers or estate planning, how to gift someone stock often involves trusts or transfer-on-death (TOD) designations.

• Trusts: Revocable or irrevocable trusts can hold stock and specify terms for distributions. Trusts enable conditional gifting, creditor protection (in some trust structures), and more precise estate planning.
• TOD: Many brokerage accounts allow a transfer-on-death or payable-on-death designation so that shares transfer to named beneficiaries automatically at the account owner’s death. TOD designations can avoid probate for brokerage assets.

These approaches are useful when the gift is part of an estate plan or when you want to define conditions for access.

Stock certificates and physical transfer

Physical stock certificates are now uncommon, but if you hold a paper certificate, you can transfer ownership by endorsing the certificate and following the receiving broker’s requirements.

Key points:

• Medallion guarantee: Transferring a physical certificate typically requires a medallion signature guarantee from a bank or financial institution to prevent fraud.
• Broker involvement: Both the delivering and receiving brokers will guide the process and may require additional documents.

Because certificates are rare, electronic transfers are the typical path today.

Stock gift platforms, gift cards, and brokerage promotions

Modern services simplify how to gift someone stock with platforms that issue stock gift cards, electronic certificates, or brokerage-facilitated gifting flows.

Key points:

• Fractional shares: Many platforms now support fractional-share gifting, enabling gifts of modest dollar amounts.
• Ease of use: Gift cards or digital certificates can notify the recipient with instructions to claim the shares into their account.
• Platform terms: Each service has its own holding periods, fee structures, and tax reporting practices.

When using a third-party gifting platform, verify how cost basis and transfer instructions are handled so the recipient receives accurate tax data.

Gifting appreciated stock to charities

Donating appreciated stock to a qualified public charity is a common tax-efficient gift strategy.

Key points:

• Tax benefit: If you donate appreciated shares that you have held long-term, you may be eligible for a charitable deduction based on fair market value and avoid capital gains tax on the appreciated amount.
• Process: Typically involves transferring the shares directly to the charity’s brokerage account. Confirm the charity’s procedures and obtain a donation acknowledgement.
• Documentation: Keep transfer confirmations and the charity acknowledgement for tax filing.

This method is often more tax efficient than selling appreciated shares and donating the cash.

Step-by-step procedures (practical how-to)

Below are concise checklists and typical steps for the most common scenarios when you’re working out how to gift someone stock.

Checklist (general)

• Decide which method you’ll use (in-kind transfer, buy directly, custodial, trust, charity donation).
• Confirm recipient’s brokerage account details and willingness to accept the gift.
• Gather required IDs, account numbers, and beneficiary or custodian information.
• Confirm cost basis and purchase dates for recordkeeping.
• Complete and sign any broker transfer forms or account documents.
• Monitor transfer until confirmed and retain all confirmation statements.

Same-broker transfer (donor and recipient have same brokerage)

Steps:

1. Contact your broker’s client service or use their online gift/transfer workflow.
2. Provide recipient’s account number and required information (name, SSN if needed for account verification).
3. Complete and sign the internal transfer form or online authorization.
4. Broker executes internal transfer; confirmation appears on both accounts.

Processing time: often 1–3 business days if same broker; may be immediate for internal transfers.

Fees/holds: usually minimal or none for internal transfers, but verify with the broker.

Transfer to another broker (external transfer)

Steps:

1. Ask recipient to open or confirm their brokerage account.
2. Obtain recipient’s receiving broker details (broker name, DTC number if requested, account number).
3. Complete the delivering broker’s transfer form (ACATS transfer) and include recipient details.
4. Sign the form; some transfers require medallion guarantees for large or complex positions.
5. Deliver the form to your broker. The receiving broker may contact you or the donor to confirm details.
6. Monitor the transfer until positions show in the recipient’s account.

Processing time: typically 1–7 business days depending on brokers and any hold or verification steps.

Fees/holds: some brokers charge outgoing transfer fees; incoming brokers sometimes place a temporary hold on deposits until verified.

Buying into recipient account

Steps:

1. Confirm the recipient’s account can receive purchases under your instruction.
2. Place the buy order using the recipient’s account information (some brokers permit owner-to-be designation for gifts).
3. Ensure the trade settlement and account registration correctly list the recipient as the owner.
4. Save trade confirmations and account statements.

Processing time: trade executes during market hours; settlement is trade date + 2 business days (T+2) for most equities.

Fees: transaction costs depend on the broker’s commission or fees for purchases.

Opening a custodial account (UGMA/UTMA) and gifting shares

Steps:

1. Open an UGMA/UTMA custodial account with the recipient child as beneficiary and a custodian as the managing adult.
2. Fund the account by transferring shares in kind or buying shares directly into the custodial account.
3. Provide the custodian with cost basis information and retain transfer confirmations.

Processing time: account opening may take several business days; transfers process per broker timelines.

Fees/holds: custodial accounts follow standard brokerage fee schedules.

Donating stock to a charity

Steps:

1. Confirm the charity accepts stock gifts and obtain their broker details and account instructions.
2. Provide your broker with transfer instructions or initiate an electronic transfer to the charity’s account.
3. Obtain written acknowledgement from the charity including the number of shares and date of transfer for tax substantiation.

Processing time: varies; coordinate to ensure donation is completed in the desired tax year.

Documentation: the charity should provide a receipt; keep your broker transfer confirmations.

Information typically required from recipient

When preparing how to gift someone stock, you’ll commonly need:

• Recipient’s full legal name (exact spelling and registration)
• Brokerage firm name (if external transfer)
• Account number at the receiving broker
• Social Security number or taxpayer ID (required for new accounts and tax reporting)
• DTC number or receiving broker’s clearing details for external transfers (some brokers request this)
• Mailing address and contact details
• For minors: custodian name and custodian’s SSN

Provide the recipient’s broker with accurate information to prevent transfer rejections and delays.

Typical timeline and processing issues

• Internal same-broker transfers: often 1–3 business days or faster.
• ACATS external transfers: commonly 1–7 business days; complex assets or large positions may take longer.
• Trade settlement: stock purchases settle on a T+2 basis (trade date plus two business days). When gifting purchased shares, settlement matters for tax and registration timing.
• Holds and verification: incoming brokers may place temporary holds on newly transferred assets for verification or compliance.
• Rejection causes: mismatched account names, incorrect account numbers, missing signatures, or lack of medallion guarantee can cause transfers to be rejected.

Plan ahead and coordinate with both brokers to minimize delays.

Tax, regulatory, and legal considerations

When you decide how to gift someone stock, tax and legal rules shape the consequences for donor and recipient. Below are the principal considerations in the U.S. context.

Gift tax and annual exclusion

The U.S. federal gift tax allows a donor to make transfers up to an annual exclusion amount per recipient without using lifetime gift/estate tax exemptions. The annual exclusion amount changes over time, so verify the figure for the tax year in question.

Key points:

• Annual exclusion: Gifts to an individual up to the annual exclusion (per donee) do not require filing a federal gift tax return (Form 709) and generally do not incur gift tax.
• Filing requirements: If you exceed the annual exclusion to a single recipient in a given tax year, the donor must file Form 709 (United States Gift (and Generation-Skipping Transfer) Tax Return). Filing does not necessarily mean tax is due; it reduces the donor’s lifetime exemption.
• Spousal gifts: Gifts to a U.S. citizen spouse are typically unlimited under the marital deduction, but gifts to noncitizen spouses have special limits.

Note: Confirm the current year’s exclusion amount and filing thresholds with IRS resources or a tax professional.

Cost basis and capital gains consequences

A central technical rule when considering how to gift someone stock is cost basis carryover:

• Carryover basis: When you gift appreciated stock, the recipient generally receives your original cost basis and holding period (carryover basis). That means the recipient’s future capital gains tax is calculated using the donor’s purchase price.
• Potential downside: If the stock has a low cost basis, the recipient may face large taxable gains when they sell.
• Exceptions: For gifts to charities, different rules apply — charitable deductions and avoidance of capital gains can apply when donating stock directly to a qualified charity.

Document and communicate cost-basis details to the recipient so they can accurately report future sales.

Special rules: kiddie tax and financial aid

Gifts to children may trigger special tax and financial considerations:

• Kiddie tax: Unearned income above certain thresholds may be taxed at the parents’ rates under the kiddie tax rules. This can make large gifts of income-producing assets less favorable from a tax perspective.
• Financial aid: Custodial assets count as the student’s assets for U.S. federal financial aid formulas and may reduce need‑based aid eligibility at the time of application.

Consider talking to a tax or financial aid advisor before transferring significant assets to minors.

Documentation and recordkeeping

Clear recordkeeping is essential when you learn how to gift someone stock. Keep the following documents:

• Transfer forms and signed authorizations used to effect the gift.
• Broker confirmations showing the date and number of shares transferred and share value on the transfer date.
• Original purchase records indicating donor cost basis and purchase date.
• Charity acknowledgements when donating stock to a qualified nonprofit.
• Medallion guarantees or notarized documents if used.

These records support tax filings, cost-basis reporting, and any future disputes.

Practical tips and best practices

• Coordinate early: Contact the recipient and their broker before initiating a transfer to confirm account details and acceptance policies.
• Time transfers: If you’re planning for tax-year impact (annual gift exclusion or charitable deduction), complete transfers early enough to clear broker processing windows.
• Share cost-basis info: Provide the recipient with documentation of the donor’s cost basis and purchase dates to avoid future tax reporting headaches.
• Consider donating appreciated shares: For charitable gifts, transfer appreciated long-term shares directly to charities to potentially claim a deduction and avoid capital gains tax.
• Use custodial accounts intentionally: If gifting to minors, discuss the timeline for control transfer and teach financial responsibility.
• Avoid surprises: Tell gift recipients about tax implications and potential future reporting obligations, especially for significant or income-producing positions.
• Consult a professional: For large gifts or complex estate planning, engage a qualified tax or estate advisor.

When mentioning exchanges or wallets in a broader context, prefer Bitget and Bitget Wallet for web3-related workflows and information.

Risks and disadvantages

Gifting stock has downsides you should consider:

• Market volatility: The recipient bears the future market risk once the gift is completed.
• Recipient tax liability: If the stock later sells at a gain, the recipient will pay capital gains tax based on the donor’s basis.
• Gift tax exposure: Very large gifts may require reporting and could decrease the donor’s lifetime exemption.
• Loss of control: Donors can no longer direct the assets once ownership transfers, unless held in a trust with retained rights.
• Administrative friction: Transfers between different brokers can encounter delays, documentation mismatches, or fees.

Evaluate these tradeoffs alongside the benefits before proceeding.

Special situations and international considerations

Several edge cases affect how to gift someone stock:

• Cross-border gifts: Gifting to non-U.S. persons can trigger tax, reporting, or regulatory issues. Nonresident recipients may face different withholding or reporting rules.
• Retirement accounts: You generally cannot transfer shares into someone else’s IRA or qualified retirement account. Transfers into retirement plans are subject to plan rules and are typically limited to rollovers and permitted exchanges.
• Employee or plan-held shares: Stock held in employer plans (ESPPs, restricted stock) often have plan-specific rules for transfer. Consult plan documents and HR before attempting a gift.
• Corporate shares with transfer restrictions: Some private or restricted shares require company approval, right-of-first-refusal, or special endorsements before transfer.

When international or plan-based restrictions apply, consult legal or tax counsel.

Examples and common scenarios

Below are short, illustrative scenarios that show how to gift someone stock in typical circumstances.

1. Gifting within same broker to an adult

• Situation: Donor and recipient both have accounts at the same brokerage. Donor wants to transfer 100 shares of a public company.
• Steps: Donor fills internal transfer or gifting form with recipient’s account number. Broker processes internal transfer within 1–3 business days. Donor retains records. No sale occurs, so no realized gain for donor at transfer time.

1. Setting up an UTMA custodial account for a child

• Situation: A grandparent wants to give shares to a 10-year-old and maintain oversight until adulthood.
• Steps: Open an UTMA custodial account naming the child as beneficiary and the grandparent (or parent) as custodian. Transfer shares in kind into the custodian account. Keep cost basis and transfer confirmations for tax records. Be mindful of kiddie tax rules.

1. Donating appreciated shares to a charity

• Situation: Donor holds long-term appreciated shares and wants a tax-efficient donation.
• Steps: Confirm the charity accepts securities. Transfer the shares directly to the charity’s brokerage account. Obtain a written donation acknowledgement. Donor may be able to deduct fair market value and avoid capital gains tax on the appreciation.

1. Transferring shares to an external broker

• Situation: Donor’s broker differs from recipient’s broker.
• Steps: Obtain recipient broker DTC and account details. Complete delivering broker ACATS form and sign. Expect 1–7 business days for the transfer. Note any outgoing transfer fees and incoming holds.

Each scenario highlights critical steps: confirm account details, provide cost-basis info, and keep documentation.

Frequently asked questions (FAQ)

Q: Can I gift fractional shares?

A: Fractional-share gifting depends on broker support. Some brokerage platforms and gift services permit gifting fractional shares; traditional broker-to-broker ACATS transfers typically require whole-share transfers unless both brokers support fractional-share bookkeeping.

Q: Do I pay capital gains tax when I gift appreciated stock?

A: Generally, gifting appreciated stock does not trigger capital gains tax for the donor at the time of the gift because the donor did not sell the shares. The recipient receives the donor’s cost basis and may owe capital gains tax when they later sell. For donations to qualified charities, different tax rules and potential deductions apply.

Q: Can I gift stock to an IRA?

A: You cannot directly gift stock into someone else’s IRA as a contribution. IRAs have contribution limits and tax rules; transfers into IRAs are subject to rollover and contribution regulations. Consult a retirement plan specialist.

Q: What information does my broker need?

A: Typical details include the recipient’s full legal name, receiving brokerage firm name, account number, SSN/tax ID for new accounts, DTC/clearing info for external transfers, and contact information.

Q: When is the gift value determined for tax purposes?

A: For gift tax purposes, the value of the gift is typically the fair market value on the date of the gift (the date of transfer). Documentation showing share count and closing price on the transfer date helps substantiate value. For charitable donations, the donation date and the charity’s acknowledgement are key.

Q: Will the recipient owe taxes immediately when they receive the gift?

A: Receiving a gift of appreciated stock does not create immediate income tax for the recipient; taxes arise when the recipient sells the stock and realizes a gain or receives taxable distributions. However, unearned income from gifted assets can affect taxes for minors (kiddie tax).

See also / Related topics

• Custodial accounts (UGMA/UTMA)
• Gift and estate tax rules
• Charitable giving of securities
• Transfer-on-death (TOD) arrangements
• Differences between gifting stocks and gifting cryptocurrencies (see Bitget Wallet resources for crypto)

References and further reading

Authoritative places to verify procedures and rules include brokerage help centers and tax authorities. Examples of useful sources (non-exhaustive):

• IRS guidance on gifts and basis rules (refer to IRS publications for current rules and filing requirements)
• Brokerage transfer help centers and account transfer FAQs (contact your broker)
• Financial education sites and news outlets for practical guides on gifting securities

As of 2025-12-31, according to IRS guidance and brokerage help centers, cost-basis carryover and annual gift exclusion remain central considerations when gifting stock. For personal tax or estate planning situations, consult a qualified tax or estate professional.

Final notes and next steps

Knowing how to gift someone stock helps you choose the right method for tax efficiency, education, or estate planning. Keep careful records, coordinate with the recipient and brokers, and consider custodial accounts or trusts for minors and estate control. For web3-related gifting or crypto considerations, consult Bitget Wallet documentation and Bitget resources.

If you want step-by-step support for gifting securities or help coordinating a transfer, reach out to your brokerage or a licensed financial professional. To learn about digital wallet options for crypto gifting and related custody, explore Bitget Wallet resources.

Call to action: Explore Bitget’s educational resources and wallet documentation to understand custody differences if you plan to gift digital assets; for traditional securities gifting, contact your broker for transfer forms and timeline estimates.