A custodial account is an account set up on behalf of, or “in custody for” an individual, typically a minor child (18 or younger) or a medically impaired individual. Once a custodial account is established, the person setting up the account no longer has unlimited control over the assets in the account.
## Key considerations
All gifts into an UTMA accounts are irrevocable
The funds deposited to the account cannot be returned to the donor/transferor who transferred the money or assets
Custodial users are not allowed to place orders—all trade instructions MUST come from the parent/Custodian
The property in the account is owned by the minor. The assets in the account may be taken into consideration when the minor is conducting other financial transactions (financial aid, scholarships, public assistance, etc.)
## Tax differences
The minor’s social security number (SSN) is used for tax reporting purposes. Refer to [Tax handling](🔗) for circumstances where this may be applicable
## Creating a custodial Account
Creating a custodial Account requires the establishment of two users; one for the parent, which holds the account, and one for the child, which is linked to the Account. Because two Users are required, opening a custodial Account follows the following steps:
### Step 1: Onboard the parent
Create the parent using the standard [Create User](🔗) API. The parent `
userType` will be set to: `
### Step 2: Onboard the child
When onboarding the child user, the userType must be set to `
CUSTODIAL`. Note that failure to make this change will cause a failure when attempting to create the custodial Account under the parent.
The child user also requires use of the `
CUSTODIAN_INFO` digital document. Set the `
userID` field of the `
CUSTODIAN_INFO` document to the `
userID` of the parents User received in step 1.
### Step 3: Open the Account
Using the parents `
userID`, open the Account utilizing the Accounts API. By adding the child's User ID to the `
authorizedUsers` object, the child User now has defined permission to receive read only information on the Account—such as the holdings of the Account.
Note that there are two available `
accountManagementType` options available for custodial accounts:
CUSTODIAL`: Used for self-directed trading—the parent will choose their own investments without discretionary advice.
CUSTODIAL_MANAGED`: Used for discretionary trading and robo-advisory. This management type is required for partners utilizing [Automated trading](🔗).