Gifting Stock to Family Members: What to Know
Gifting stock to family members may lack the pizzazz of leaving a luxury car adorned with a bow in the driveway, but it’s a gift that can add value to their lives long after most other gifts have been forgotten. Here’s a look at some considerations when contemplating gifts of stock to family members.
How to Gift Stock
There are several methods that you could use to gift shares of stock. The gift would typically be made with an electronic transfer from your account to the account of the recipient of the shares. Gifts of stock can be made instead of giving cash. The annual gifting limits of $15,000 per person ($30,000 for a joint gift with your spouse) apply, and the value of the stock on the day of the transfer constitutes the amount of the gift.
Tax Implications of Gifting Stock
At the time the stock is gifted to a family member, there are no tax implications. However, there are some points for you to keep in mind.
When gifting stock to a relative, there is no tax impact on the donor or the relative receiving the shares. If the value of the gift is within the annual gifting limits, there is nothing for the donor to file.
If the gift exceeds that amount, they would have to file an estate and gift tax return, but again, there would be no tax implications unless the gift exceeded their lifetime gift and estate tax exemption.
Benefits of Gifting Stock
Gifting stock to family members can have its benefits.
Brett Koeppel, CFP and founder of Eudaimonia Wealth in Buffalo, New York, says: “Gifting appreciated stock to a family member instead of simply giving cash can be a win-win for both you and your family. If the family member is in a lower tax bracket and needs to access the funds, they’ll be able to sell the stock with less tax liability. This strategy is particularly effective when giving to parents who may have a lower income, or to adult children who haven’t yet reached their peak earning years.”
Gifting shares of stock to family members can have a number of advantages, including in cases where you are giving appreciated shares to a family member in a lower income bracket.
However, there can be some issues to be aware of surrounding the use of stocks as a gifting vehicle. The impact will depend upon the family member’s situation, as well as other factors. Some of these situations can be more complex. We are here to provide guidance and support to ensure that gifting shares is the best option — and if it is, how you can make the gift in the most advantageous method.
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