Elon Musk’s $10.5 billion SpaceX gift to kids has a catch: Families can’t say no — and may have to wait 5 years to cash out
Nearly 70 million American children now benefit from tax-advantaged investment accounts, courtesy of President Donald Trump, with $1,000 invested in index funds for those who qualify based on their date of birth — as well as, if the promises come to fruition, individual stocks, including Elon Musk’s SpaceX.
Musk said on October 19 that he would give $10.66 billion to “every child in America,” and much more, in the form of one SpaceX share per child.
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In response to a question on X about whether donations would be made through Trump accounts, Musk simply replied: “Yes.” The messages from Trump and Treasury Secretary Scott Bessent also indicate that these shares will land in Trump’s accounts, with Trump praising Musk for his “incredible generosity in giving SpaceX stock to millions of American children.”
But there is a catch to these seemingly benevolent contributions.
Free equity, but with a catch
Why would anyone think to complain about free assets? This depends in part on the potential motivations and who might benefit from the deployment, apart from the beneficiaries.
If the shares are donated through an appropriate vehicle, such as a foundation, then the donors could benefit from the appropriate charitable deductions. Adding SpaceX (NASDAQ: SPCX) stock to Trump’s accounts also allows the company to avoid much of the capital gains taxes on its growth.
Then there are the reservations regarding additional capital.
On the one hand, account holders may be subject to a minimum holding period of five years or until the end of the calendar year in which the beneficiary turns 17, whichever comes first. This means they can’t sell it in most circumstances, aside from rare events such as a stock being formally delisted, even if its value falls. A CNBC report points out that these restrictions generally help donors, including avoiding large liquidations of their company’s stock.
In a written statement, a Treasury official told CNBC: “The major donors we have engaged are motivated by a desire to help children build generational wealth and get a head start on their financial futures. »
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