Opening an M1 Custodial Account (UTMA/UGMA) allows you to invest and manage assets on behalf of a minor, with assets legally owned by the child and managed by an adult custodian until the child reaches the age of majority. This article explains how to open a custodial account, key rules, state-specific details, how the transition at age of majority works, important tax considerations, and solutions for common issues.
What is a Custodial account?
A custodial account is an investment account you open and manage for the benefit of a minor (the beneficiary). Assets in the account are irrevocable gifts to the minor and must be used for their benefit.
M1 Custodial Accounts are cash accounts (no margin loan capability).
These accounts are taxable; contributions cannot be transferred to an M1 IRA.
Only the custodian manages the account until the beneficiary reaches the age of majority.
Both incoming and outgoing account transfers are available via ACATS.
How to open an M1 Custodial account
You can open a Custodial Account directly from your M1 dashboard.
Select “Add Account”
Select Custodial Account
Note: An open M1 Individual or Joint Brokerage account is required before opening an M1 Custodial Account.
UTMA vs. UGMA: State-specific details
All new Custodial Accounts are designated UTMA. All states repealed their UGMA statutes upon enacting their UTMA statutes. Any UGMA accounts in existence before the date of the repeal are grandfathered using the original UGMA age of termination.
UGMA (Uniform Gifts to Minors Act): Fewer asset types, available in all states.
UTMA (Uniform Transfers to Minors Act): Broader asset types, but not available in every state.
Age of Majority by state
The age when custodianship ends varies.
Typical range: 18 to 21; some states allow up to 25 for UTMA accounts.
At the beneficiary’s age of majority, the custodian no longer controls the account.
Managing the Custodial account
The account appears under the custodian’s login.
Only the custodian can approve trading, deposits, or withdrawals.
The minor may view the account only if provided secure access by the custodian.
Note: M1 can only provide account details or assistance to the custodian (primary account holder) until custodianship ends.
Funding and withdrawals
All deposits: Irrevocable gifts for the benefit of the minor.
There is no maximum contribution.
Please be aware of any tax implications regarding large deposits.
Withdrawals: Must be for the direct benefit of the minor; cannot transfer to other M1 Invest accounts—there cannot be transfers initiated from the Custodial Account directly to another M1 Invest Account unless through the client's external bank account.
Any withdrawal from a Custodial Account must be “for the use and benefit of the minor.”
What happens at Age of Majority?
Once the beneficiary reaches the applicable state age:
Trading activity is restricted.
The beneficiary must either transfer assets to a taxable account in their own name or request a check withdrawal (fees may apply).
No further deposits or trades are allowed until the transfer is complete.
How to transfer assets at Age of Majority:
The beneficiary (now legal owner) confirms their identity with M1.
The beneficiary submits a transfer request (choose between in-kind ACATS transfer to a new taxable account at M1/in another name, or cash withdrawal).
The original account is closed once the transfer is complete.
Brokerage accounts on the M1 platform are either fully disclosed to APEX Clearing or cleared through M1 Finance LLC. Please look at your account statement to determine how your account is cleared.
All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future performance. Using margin can add to these risks. Users utilizing APEX cleared margin accounts should review the APEX margin account risk disclosure before borrowing. Users utilizing M1 cleared margin accounts should review the M1 margin account risk disclosure before borrowing. M1 Margin Loans are available on margin accounts with at least $2,000 invested per account. Not available for Retirement or Custodial accounts. Margin rates may vary.
Brokerage products and services are offered by M1 Finance LLC, Member FINRA / SIPC, and a wholly owned subsidiary of M1 Holdings, Inc.
This content was generated using artificial intelligence and is intended for informational and educational purposes only. While reasonable efforts are made to ensure accuracy, AI-generated outputs may omit key context; and should not be construed as financial, investment, legal, or tax advice. Users should independently verify all information and consult a qualified professional before making any financial decisions.
SAIF-08212025-ao8k7dqy