How To Gift Stock, Cash, & Financial Gifts

How To Gift Stock, Cash, And Financial Gifts

This holiday season consider giving your loved ones the kind of gift that keeps on giving: stocks, cash, and other financial assets that have the potential to keep compounding for years to come! I hope you enjoy these ideas!

Video Contents:
-Intro To Gifting Stocks and Financial Assets
-Give Stock Slices aka Fractional Shares
-Stock Certificates Are Not Necessary
-Give Stocks Via Free Custodial Accounts
-Give To 529 College Savings Plan
-How To Gift Shares Via Fidelity Example
-Is There A Gift Tax?
-Custodial Roth IRA
-Financial Education Gifts
-Cash In Certificates of Deposit & Checking Accounts
-Gifting Financial Planner Advice?
-Digital Collectibles Like Cryptos/NFTs

You are able to gift stocks, mutual funds, or other securities whether or not someone has the same brokerage as you do. You can give cash through various means. You can contribute to someone’s educational savings (529 plan) or kickstart someone’s retirement investing. For the innovative gift givers, you could also choose to give some online digital collectibles.

Giving someone shares of stock or a partial ownership stake in a company is way more valuable than giving them a tangible paper representation of that ownership stake. This is because many companies tend to continue producing profits and this usually would make a share more valuable than materialistic objects that may become obsolete or lose interest over time.

I explain how to give a share through a brokerage account, it is a pretty straightforward process of gathering account and stock information and submitting this to the brokerage. It will take several business days to make the stock transfer.

For anyone who is wondering about the potential tax ramifications of giving stocks, cash, and financial gifts, for the most part many Americans shouldn’t have much to worry about unless they are huge gift givers.

Check with a tax professional when it comes to making major gift-giving decisions as I’m not giving tax advice or recommendations.

In 2021, the IRS allows each individual can give up to $15,000 in total asset value per person per year without filing a gift tax return. This is great news for generous people, meaning as an example, someone could give $15K to their sibling, cousin, friend, mom, and neighbor for $75K in the year. They are not limited to only giving a total of $15K per year.

In addition, you and spouse can each give $15K to someone, such as your mom receiving a total of $30K from both of you. The annual gift limit will be increased to $16,000 in 2022.

Moreover, it is not likely to have to pay taxes unless someone exceeds the lifetime exclusion of $11.7 million in 2021 or $12.06 million in 2022. Then the taxes on amounts in excess of the lifetime gift limits might be in the range of 18-40%.

You could also open a custodial Roth IRA for working teenagers/kids who earned income from their jobs. This way they can generate tax-free profits on the capital from their Roth IRA contributions.

Empowering young people with the gift of financial education might be the most impactful thing you could do. I am partial to investing in stocks, so I suggest giving books of respectable investors or other resources whose judgement you trust and respect.

For example, I believe the book Invested by Danielle Town and Phil Town is a great guide to enabling someone to invest like the greatest of all time investors, Warren Buffett and Charlie Munger.

There are some creative ways to help someone create more cash from the cash you give them or that they already have.

While you could open a custodial Certificates of Deposit (CD), these currently do not have very high interest rates. As of November 2021, they are in the range of around 0.5% to 0.75% for 1 to 2 years. Someone might be better off getting account opening bonuses ($200+) or higher interest rates (1%+) with certain checking accounts.

Although some online guides suggest giving someone some hours with a financial planner, this may or may not be helpful. As many as 70% of people prefer to conduct their investing in a self-directed manner so receiving personalized financial advice may not be useful to them.

If you’re trailblazing in the metaverse or just want to gift someone else cryptos or non fungible tokens (NFTs), please consult with several guides online that give specific instructions on how to transfer these collectibles to someone else in a secure way that is verifiable on the pertinent blockchain.

If you’re interested in learning how to take control of your finances and start becoming an investor like Warren Buffett, check out my free PDF guide.

I look forward to making more investor friends! Add me on Instagram: michellemarki