Elon Musk proposes SpaceX share giveaway to children via Trump Accounts amid new Treasury rules

Elon Musk said on Monday that he intends to distribute a share of SpaceX to each child in the United States next year, and thanked Brad Gerstner for helping make the plan possible. The shares would be placed in the Treasury-run Trump Accounts, a program that recently received new temporary regulations governing stock donations.

The rules, issued by the Department of the Treasury, generally prohibit beneficiaries from selling gifted shares for five years or until the year they turn 17, whichever comes first. Early sales are allowed only in limited situations such as corporate restructurings or delistings, and any premature sale would require the account trustee to repurchase the same number of shares as soon as practicable.

Legal experts said the regulations give donors unusually strong control over the terms of the gift. "Under the new Trump Account rules, it's the donor that's dictating the terms of the gift," said Carolyn Schenck, an attorney and former national fraud counsel at the IRS. She added that the buy-back requirement could increase beneficiaries' risk if the share price rises before the trustee repurchases the stock.

The Treasury justified the holding period by citing donor interest in encouraging long-term ownership and reducing the risk of large-scale sell-offs that could depress share prices. "The major donors we've engaged are motivated by a desire to help children build generational wealth and get a head start on their financial future," a Treasury official said in a written statement.

Other philanthropists have also pledged SpaceX shares through the program. SpaceX President Gwynne Shotwell announced a pledge of about two million shares earlier this summer, though distribution has not yet begun. Fewer than a dozen individual pledges have been identified, while several dozen employers have committed to seed accounts for employees' children.

Critics noted that the Treasury’s approach differs from traditional charitable giving, where the receiving charity retains ultimate control over donated assets. "A key principle is that the charity must have genuine control over the donated assets, including the ability to determine when to sell them, for the gift to qualify as a completed charitable contribution," said Gil Nusbaum of the National Philanthropic Trust.

Legal scholars also raised questions about the compatibility of the rules with existing statutes, especially after the 2024 Supreme Court decision limiting Chevron deference. "These accounts are going to have to stay invested in those stocks, and the question is whether that's directly contradicting the terms of the statute," said Jane Ditelberg, chief tax strategist at Northern Trust.

Representatives for Musk, Gerstner and the Treasury Department did not respond to requests for comment.