How to Give Stocks this Christmas

Gifting someone stock shares means you are providing the possibility of long-term wealth, meaning, the gifted shares could be worth much more in the future than their original price. You can’t say that about an iPad or Xbox. In fact individuals who received a share of Starbucks or Apple five years ago have more than tripled their worth today.

It’s true that giving shares of a single stock is the opposite of what most investors would recommend for a successful investment strategy. However, when you’re looking to teach a child or young adult about investing it’s a great way to gain their interest in the market. By gifting shares of a company that your recipient is interested, say Apple, you will have a much higher chance of engagement.

Do you want to give stock as a gift with no strings attached, so the recipient can do whatever they wish with the gifted stock once it comes into their possession? There are a number of ways to go about this,

• • Re-titled stocks you already own: If you already own shares of the stock you want to gift,  you can transfer those said shares from your brokerage account or your dividend reinvestment plan. Most often you can contact your investment company and request transfer of the shares you’d like to transfer. Typically the institution will request that you  fill out forms that allow you to re-title some of your holdings in the name of the person to whom you want to gift the stock. Additionally you can set-up a regular schedule of stock transfers if you like, for example you can transfer a set amount of shares on the 1st of every month.
  •  Set Up a direct stock purchase plan in their name: This tends to be the simplest way to gift stocks. You will fill out a form and pay for the said stocks and that is it.  Your gift recipient will receive a statement stating how many shares they have been gifted, and they can then purchase more shares if they desire.
  • Establish a trust fund where you can transfer stocks to it: This is the most flexible option when it comes to gifting stocks. However requires the most work to it set-up. You can write a trust declaration that provides the legal title of the stocks to the trustee. A plus of the this option is that there are also ways to use this type of trust as a tax write for yourself.
  • Gifting stock with restrictions: If you want to gift stocks with restrictions placed on them, there are a few options:
    • Gifting minors stocks:  Setup a brokerage account or a direct stock purchase plan. These type of accounts allow you to name a guardian to manage the money in name of the minor, this guardian will manage the funds but the property of the shares will belong to the minor.  You can decided when you would like the minor to take  possession of the shares (typically state regulations allow minors to take possession of the shares between age 18-25).  Opening this type of account is as simple as opening any other account.

Gifting stocks is a great way to establish a long-term investment for your gift recipient, its unique and allows you to personalize the gift by choosing the best type of company shares for the individual.