Gifting Stock: A Strategic Step on Life’s Financial Journey

By Stacey Chin, CFP®, ChFC®

As we move through different stages of life, our financial journey evolves. Sometimes the path is about building wealth, and other times it’s about sharing it—whether with family, friends, or the causes we care deeply about. One often-overlooked way to share wealth is through gifting stock. Gifting stock is part of a larger financial journey, one where the choices you make along the way can ripple forward to shape the lives of your family, your community, and even your own legacy. 

Why Consider Gifting Stock?

When most people think of giving, they think of writing a check or transferring cash. But stock, especially stock that has appreciated in value, offers a unique opportunity. Instead of selling shares and paying capital gains taxes, you can gift the stock directly, either to individuals or to charities. For families, this means you can pass along the fruits of your investments in a way that’s both generous and strategic. For charitable giving, it’s a chance to maximize impact by stretching your dollars further. 

Before you give stock, make sure it’s the right gift to give. There are many benefits to gifting stock, but also important tax considerations to keep in mind. Factors to consider when determining whether it makes more sense to gift stock or sell it and give away the proceeds include the value of the stock being given, the tax status, and the tax bracket of both the recipient and the donor.¹ 

Gifting to Family: Supporting the Next Generation

Gifting stock isn’t just a numbers game. It’s also about legacy. The act of giving shares, rather than cash, can open the door to conversations with children or grandchildren about investing, risk, and the importance of financial stewardship. It’s a way of sharing not only wealth, but wisdom.  

Each year, the IRS allows you to gift up to a certain amount per recipient without triggering gift tax reporting requirements. For 2025, that annual exclusion is $19,000 per person.²  That means a couple could jointly gift $38,000 worth of stock to each child or grandchild this year—without touching their lifetime estate and gift tax exemption. 

This approach can be especially powerful if you have highly appreciated stock. For example, gifting stock to a young adult in a lower tax bracket could reduce the overall taxes paid when the shares are eventually sold. It can also provide a financial boost at a key moment—helping with college costs, a first home, or simply giving a head start on building their own investment portfolio. 

Gifting to Charities: Supporting Causes You Care About

For many people, charitable giving is about more than just a deduction—it’s about aligning resources with personal values. Gifting appreciated stock to a nonprofit allows you to support causes you believe in while also realizing a tax benefit. When you donate stock you’ve held for more than a year, you generally receive a deduction for the fair market value and avoid paying capital gains tax. 

This means your gift may go further than if you sold the stock and donated cash. For example, if you’ve held a stock that’s doubled in value, donating it directly allows the charity to receive the full amount without losing a portion to taxes. Additionally, the charity generally doesn’t have to pay taxes on capital gains when the stock is sold and has the option of taking the cash and making a new investment. It’s an elegant way to extend generosity while keeping your financial plan on track. 

Donor-Advised Funds: Creating a Legacy of Giving 

Another way to gift stock with purpose is through a donor-advised fund (DAF). DAF accounts allow donors to make a charitable contribution, receive an immediate tax deduction, and then recommend grants from the fund over time. Donors can contribute to the fund as frequently as they like and then recommend grants to their favorite charitable organizations whenever it makes sense for them. This allows donors to give when they can, then grant when it’s needed.³ 

This approach provides a way to weave philanthropy into your family’s story while maintaining flexibility and control. It’s not just about giving; it’s about shaping a legacy that reflects your journey and inspires the generations who follow. 

Trusts: Adding Structure to Your Financial Plan

For families or philanthropists with larger stock holdings, trusts can provide a structured path for gifting. A charitable remainder trust, for example, allows you to donate stock, receive income from it for a period of time, and eventually pass the remainder to charity. A charitable lead trust works in reverse, sending income to charity for a set number of years before transferring what’s left to heirs. 

Trusts require more planning and professional guidance, but they offer a powerful way to balance generosity with financial security. They can also ensure that the path your wealth takes reflects your values long after you’re no longer steering it. 

Tax Considerations Along the Way 

As with any part of a financial plan, the details matter. It’s important to understand the tax rules around gifting stock. As mentioned earlier, the annual exclusion allows you to give up to a certain amount each year ($19,000 per person in 2025), without triggering gift taxes—an opportunity to make consistent, tax-efficient transfers over time.  

Gifting appreciated stocks allows you to “give away the gain” because the recipient inherits your cost basis and holding period in the stock. If the recipient chooses to sell the stock, they realize the full gain when the stock is sold. Although the recipient realizes the full taxable gain, this may be less than the gifter would have paid, especially if the recipient is in a lower tax bracket and holds the stock for more than a year so that it qualifies for the lower long-term capital gains tax rates. 

For example, if you were to give a friend $12,000 worth of stock purchased five years earlier for $7,000, they would be liable to pay long-term capital gains taxes on a profit of $5,000 should they sell the stock immediately.⁴ 

Taking the First Step 

If you’re considering gifting stock, the process begins with a simple transfer from your brokerage account. But the impact of that transfer can be far-reaching, both financially and emotionally. It’s not just about moving shares; it’s about charting a course for your wealth that reflects your values, priorities, and hopes for the future. 

Every journey is made up of choices. Choosing to gift stock is one way to make your wealth an active part of the story you want to write—for your family, for your community, and for the causes that matter most to you. Treehouse Wealth is here to walk alongside you, helping you turn the decision to gift stock into a strategy that reflects your values and long-term vision.