Can I Gift Shares to My Son? The Ultimate Guide to Stock Gifting for Your Child

Are you wondering if you can gift shares to your son or daughter? Maybe you’ve accumulated some stocks over the years and want to give a meaningful financial gift that goes beyond cash. I’ve got good news – you absolutely can gift shares to your son, and it might be one of the smartest financial moves you’ll make for both of you!

As someone who’s helped many families navigate the process of transferring wealth, I can tell you that gifting stocks isn’t just possible, it’s potentially brilliant from both a tax perspective and as a teaching tool. Let’s dive into everything you need to know about gifting shares to your children.

Why Gift Stocks Instead of Cash?

Before we get into the how-to let’s talk about why you might want to give stocks rather than a simple cash gift

1. It’s a two-way financial benefit – Both you and your child can potentially gain tax advantages
2. It teaches financial literacy – What better way to introduce investing concepts?
3. It’s a gift that can grow – Unlike cash that might be quickly spent, stocks have growth potential
4. It’s more meaningful – It says “I trust you with something valuable and long-term”

As the experts at Charles Schwab point out, “Stock is a symbolic gift as well as a financial one. It says, ‘I think you’re mature enough to navigate and enhance your knowledge in the world of investing.'”

The Tax Benefits of Gifting Stock to Your Son

One of the biggest reasons to consider gifting appreciated stock is the potential tax advantages, Here’s the breakdown

For Your Son (The Recipient):

• He’ll inherit your original cost basis and holding period
• If he’s in a lower tax bracket (which young adults often are), he might pay significantly less in capital gains tax when selling
• Young adults who are independent and have income under $48,350 for single filers in 2025 might qualify for a 0% capital gains tax rate if they sell after holding the shares for more than a year

For You (The Giver):

• You avoid paying capital gains taxes on appreciated stocks
• You can remove potential future appreciation from your estate (helpful for estate tax planning)
• You stay within the annual gift tax limit ($19,000 per recipient in 2025, unchanged for 2026) to avoid using up your lifetime exemption

How to Gift Shares to Your Son

You’ve got several options for transferring stock ownership to your child

1. Direct Transfer to a Custodial Account

For minor children, you’ll likely need to set up a custodial account under the Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA).

Pro tip: You can make an agreement with your broker to give or transfer shares to a child every year on their birthday. This creates a meaningful tradition while spreading out the gift over time.

2. Transfer to an Existing Account

If your son already has a brokerage account, you can transfer shares directly to it.

3. Set Up a New Individual Account

For adult children, you can help them open their own brokerage account and transfer the shares.

4. DRIPs (Dividend Reinvestment Plans)

Some companies allow direct stock purchases and gifts through their dividend reinvestment plans.

Important Considerations Before Gifting Stock

While gifting stock has many benefits, there are some important caveats to keep in mind:

The Kiddie Tax

This is a big one that catches many parents by surprise. The “kiddie tax” applies to:

• Full-time students under age 24 (at the end of the calendar year)
• Who don’t earn enough income to cover at least 50% of their living/education expenses

In these cases, unearned income (like dividends) exceeding $2,700 in 2025/2026 will be taxed at the parents’ income tax rate. This can significantly reduce the tax benefits!

Financial Aid Implications

If your son is college-bound or currently in college, be aware that:

• Up to 20% of assets owned by a dependent student may be counted as available for college expenses
• Up to 20% of income (including from selling assets) above certain limits will factor into financial aid calculations

This means that while your intentions are good, gifting stock could potentially reduce your son’s financial aid eligibility.

Gift Tax Considerations

While the annual gift tax exclusion is generous ($19,000 per recipient in 2025), anything above that will count against your lifetime exemption. If you’re gifting substantial amounts, you’ll need to file IRS Form 709.

Step-by-Step Guide to Gifting Stock

Ready to give your son some shares? Here’s how to do it:

1. Decide which shares to gift

   • Consider appreciated stocks you’ve held for more than a year
   • Think about companies your son might find interesting or relevant

2. Choose the appropriate account type

   • For minors: UGMA/UTMA account
   • For adults: Regular brokerage account

3. Contact your broker

   • Request their specific stock transfer form
   • Provide details about the recipient’s account

4. Complete the paperwork

   • Specify exactly which shares and how many you’re transferring
   • Provide all required signatures

5. Follow up

   • Confirm the transfer went through
   • Get documentation for your tax records

6. Have the money talk

   • Explain what you paid for the shares
   • Discuss their current value
   • Talk about why you chose these particular stocks
   • Review potential tax implications if they decide to sell

Best Stocks to Gift to Your Son

While I can’t give specific investment advice, here are some categories to consider:

• Companies they know and use – Think tech companies, entertainment brands, or consumer products they love
• Dividend-paying stocks – These provide regular income and teach the power of compounding
• Blue-chip companies – Established firms with stable histories can be good teaching tools
• Index funds or ETFs – These provide instant diversification if you want a more conservative approach

Real-Life Example

Let me share a quick story. My friend Mike gifted his son $5,000 worth of Amazon stock when he turned 16 instead of buying him a used car. His son was initially disappointed, but Mike explained the potential growth and what the company represented. Five years later, that gift had more than doubled in value, enough for his son to buy a much nicer car than would have been possible originally—plus he still had some shares left! More importantly, his son developed an interest in investing that continues today.

Common Questions About Gifting Shares

Can I gift shares to my adult son the same way as a minor?

Yes, but the process is simpler. An adult can have their own brokerage account without needing a custodial arrangement.

Is there a minimum or maximum amount of stock I can gift?

There’s no minimum, but gifts exceeding $19,000 in value (for 2025) will require you to file a gift tax return.

What happens if my son wants to sell the stock immediately?

That’s his choice, but make sure he understands the tax implications. If the stock has appreciated significantly, he’ll owe capital gains tax.

Can I still vote shares that I’ve gifted?

No. Once you gift the shares, all ownership rights transfer to the recipient.

Will I receive a tax deduction for gifting stock?

No, unlike donations to charity, gifts to individuals don’t provide income tax deductions.

When NOT to Gift Stock

Gifting stock isn’t always the right choice. Consider other options if:

• The stock has declined in value (you may want to sell it yourself to claim the loss)
• Your son needs immediate funds and would have to sell right away
• You’re concerned about how he might handle the responsibility
• The stock might trigger substantial kiddie tax issues
• Your son is applying for financial aid and the assets would hurt his eligibility

Conclusion

Gifting shares to your son can be a wonderful way to help secure their financial future while potentially saving on taxes. It’s more than just a monetary gift—it’s an opportunity to teach valuable lessons about investing, patience, and long-term thinking.

Remember to consult with a tax advisor before making significant stock gifts, especially if large amounts are involved. They can help you navigate the complexities of basis transfers, gift taxes, and other considerations specific to your situation.

Have you gifted stocks to your children? What was your experience like? I’d love to hear your stories in the comments!

Final thought: In a world where financial literacy is rarely taught in schools, gifting stocks to your children might be one of the most valuable educational experiences you can provide. It’s truly a gift that keeps on giving!