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The School of Transmutation wizard gains the Transmuter's Stone feature at 6th level. Does the transmuter's stone need to be held in hand to benefit from it? Or can I gain its benefit even if it's in my backpack or pocket? If I make a necklace with it or embed it in my armor or weapon, do I still get the stone's benefit?

I'm looking for an answer based on the rules.

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They can benefit from the stone without touching it

The description of the Transmuter's Stone (PHB, p. 119) reads

A creature gains a benefit of your choice as long as the stone is in the creature’s possession.

"Possession" does not appear to be rigorously defined in DnD but if we look at its usage we can draw conclusions about how it is meant to be used.

The spell Swift Quiver (PHB, p. 280) reads

If the quiver leaves your possession, the spell ends.

For a character wearing clothes, it would be difficult to imagine a quiver in contact with the character's skin. Furthermore a quiver is commonly not held in a hand. It is likely, therefore, that an item in a creature's possession is not limited to items in their hand.

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A character gains the stone's benefit while it's in their possession.

The description of the School of Transmutation wizard feature Transmuter's Stone says, in part (PHB, p. 119; emphasis mine):

Starting at 6th level, you can spend 8 hours creating a transmuter’s stone that stores transmutation magic. You can benefit from the stone yourself or give it to another creature. A creature gains a benefit of your choice as long as the stone is in the creature’s possession. [...]

As long as the stone is on a character's person, that character gains the benefit from the stone that you chose when you created the stone (darkvision, a speed increase, proficiency in Con saves, or resistance to one of the listed damage types). This applies whether the character is holding it, wearing it in a necklace, has it in a backpack, or however else they might have it, as long as it's on their possession.

(If you have the transmuter's stone yourself, you can also change the benefit of the stone when you cast a transmutation spell of 1st level or higher as long as it's in your possession.)

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