When it comes to gifts, a lot of people are quick to think of tangible options like cash, clothing, jewelry, and machines however what comes as a better gift than all that? Share or stock gifting is a way of appreciating your loved one and has several benefits. It only entails the transfer of share ownership and earns the recipient dividends among other benefits without having to move a muscle for the same. You might now be wondering how share gifting happens and if so then you are on the right page. Discussed in this guide are some of the different ways one can gift shares or stock today.
Smart donations to charity
Have you ever wondered whether the donation you made to a charity was used in a resourceful way? A lot of philanthropists are growing from gifting cash to charity organizations and instead choosing to gift shares and stock instead. One of the main reasons for the same is to avoid the tax implications that come with cash gifting. Philanthropists can also claim fair market value charitable deduction based on the shares donation that they make to the organization.
Virtual stocking stuffer
Does the receiver of the shares you are gifting have a brokerage account? If so, that is the most important requirement they are to meet before receiving your gift from wherever they may be on the globe. You no longer have to resort to gifts like Christmas cards when there are better virtual gifts that could change the life of your loved one. All you need are the brokerage account details of the recipient and if they lack one you can take the initiative of opening one for them as long as you have all their correct details.
A way of passing wealth
For those investors with a lot of shares in different companies, drawing up a will becomes even easier. Rather than leaving cash and other assets as inheritance, transfer of share ownership to your children might just be the move to make. They can benefit from the dividends yielded by the shares for a long time as long as they do not transfer the ownership rights to another buyer. It is one of the most reasonable ways to ensure that the wealth you share with your family is used wisely and not misused.
Make custodial accounts for your children
After learning how the stock market works, most people grow to make wise investments that end up making life-changing fortunes for them. It is such a habit you might want to cultivate in your children for better financial management and responsibility at a younger age. To get them started, create custodial brokerage accounts where the number of shares or stock amount can be transferred. The recipient who is your child will however only manage to access and control the contents of the custodial brokerage account once they are of legal age which is 18.
Why should I give shares and stock instead of physical assets?
The first reason why share gifting is highly advisable is to enjoy the tax relief associated with it. This is only because it remains one of the effective ways through which appreciated stock can be transferred from your account to the desired recipient address. The recipient has the option of selling the shares or holding them with the company however they will not pay any capital gain taxes for the same. It is lastly instrumental in teaching the recipient about the value of investing in the shares and stock market for their financial growth.
