Elon Musk’s $10.5B SpaceX gift to kids has a catch: Families can’t refuse it — and may need to wait 5 years to cash out

But there is a catch to these seemingly benevolent contributions.

Free equity, but with a catch

Why would anyone even think to complain about free assets? Part of it comes down to the potential motivations, and who may be benefiting from the rollout aside from recipients.

If shares are donated through an appropriate vehicle, like a foundation, then donors could reap the appropriate charitable deduction benefits. Adding SpaceX (NASDAQ:SPCX) shares into Trump Accounts also allows the company to avoid a chunk of capital gains taxes on their growth.

Then there are the caveats on the complimentary capital.

For one, 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 is earliest. This means they can’t sell it in most circumstances, other than rare events such as the formal delisting of a stock, even if the value is plummeting. A report from CNBC points out that these restrictions generally help donors by, for one, avoiding large liquidating events of stock from their company.

In a written statement, a Treasury official told CNBC, “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.”

Along with not being able to instantly sell their shares, families can’t select or refuse stocks like SpaceX even if they wish to do so, and aren’t able to opt out of the program completely once signed up.

That said, the Treasury is positioning the recent automatic enrollment as a way to provide all children the chance to own a stake in particularly successful American brands, like SpaceX, and invest in America generally.