Open an M1 Custodial Account (UTMA/UGMA)

Account ownership 

M1 clients can open M1 Custodial Accounts for a minor.  

Each contribution to the Custodial Account is considered an irreversible gift to the minor (Custodial Account beneficiary). The assets in the account are owned by the minor but are managed by the custodian.  

Once the beneficiary reaches age of majority in the state you opened their account, you will no longer have access to the account. Additionally, all trading activity will be restricted. 

When the beneficiary reaches the age of majority, the Custodial Account beneficiary may liquidate and withdraw the funds via check or transfer the assets to a taxable account they own.  

The transfer must take place once the minor reaches the age of majority, and no further activity will be permitted on the account until the transfer takes place. There are fees associated with check requests. 

  

UTMA vs. UGMA 

This is dependent on the state the account owner lives in. 

Upon opening the M1 Custodial Account, UTMA/UGMA will be designated according to the beneficiary’s address on file. So, it’s on the custodian to know at which age the account should be transferred to the beneficiary.  

The age of majority can range from 18 to 25 years old. You may want to ask a financial consultant about the laws in your state. 

  

M1 Custodial Account type 

M1 Custodial Accounts are registered as cash accounts with no M1 Margin Loan capability.  

Custodial Accounts are also taxable accounts and can be transferred to other taxable accounts upon the beneficiary reaching age of majority.  

Custodial Account assets cannot be transferred into an M1 IRA. 

  

Funding the account 

Each deposit into the Custodial Account is considered an irreversible gift and there is no maximum amount that can be contributed.  

Please be aware of any tax implications regarding large deposits.  

M1 cannot provide any tax guidance so contact a professional tax advisor with questions regarding gift tax. 

  

Withdrawals 

Any withdrawal from a Custodial Account must be “for the use and benefit of the minor.” 

There cannot be transfers initiated from the Custodial Account directly to another M1 Invest Account unless through the client's external bank account. 

  

Management of assets 

The Custodial Account will be housed on the login of the custodian who opened the account.  

The minor must contact their custodian regarding trading, money transfers, and the overall management of the account.  

Our team can only speak to the primary user of the login. 

  

Other important details 

  • Clients may open Custodial Accounts for minors who are not their children. Each deposit into the account is considered an irreversible gift to the minor, regardless of family relation. 
  • Both incoming and outgoing account transfers are available via ACATS. 

 

 

20240508-3554397-11307750

M1 disclosures here.

Was this article helpful?
/
16 out of 22 found this helpful