Gift of Stock Agreement: What You Need to Know

Giving stocks as a gift is a non-traditional yet practical way of sharing your wealth. Not only does it offer a financial benefit to the recipient, but it can also benefit you as the donor. One way to ensure the process goes smoothly is by having a gift of stock agreement in place.

A gift of stock agreement is a legal document that outlines the terms and conditions of the gift. It sets out the expectations and responsibilities of both the donor (the person giving the stock) and the recipient (the person receiving the stock). The agreement should cover a few essential details, including the name of the donor, the name of the recipient, the number of shares being transferred, and the date of the gift.

In addition to these basic details, a gift of stock agreement should also include provisions related to taxes. When a donor gives stock as a gift, they may be eligible for a tax deduction on the current market value of the shares. However, if the stock has increased in value since the donor acquired it, the recipient may be responsible for paying capital gains tax on the increase in value when they sell the shares. The agreement should clarify who is responsible for any taxes related to the gift.

Another important consideration is the transfer process. The donor will need to transfer the shares to the recipient`s brokerage account. The agreement should specify the steps involved in the transfer, such as providing the recipient`s brokerage account number and ensuring that any required forms are completed and submitted. It`s vital to ensure that the transfer is completed correctly to avoid any delays or complications.

Finally, a gift of stock agreement should include a provision that allows for any disputes related to the gift to be resolved through arbitration. This provision can help ensure that any conflicts are settled quickly and efficiently.

In conclusion, giving stocks as a gift can be a smart financial move, but it`s essential to have a gift of stock agreement in place to protect both the donor and the recipient. The agreement should cover the essential details, including taxes, the transfer process, and dispute resolution. Having a clear and comprehensive agreement in place can help ensure that the gift is successful and beneficial for both parties involved.