How to open a Merrill Edge custodial account for kids. Merrill Lynch UTMA investment assets in a brokerage account for teenagers and children.

Custodial Accounts with Merrill Edge

If you’re looking to open a custodial account so that you can invest on behalf of a legal minor, Merrill Edge may have what you need. The brokerage firm offers UGMA and UTMA accounts. Here are the details:


At Merrill Edge, you can open either the Uniform Gifts to Minors Act (UGMA) account or the Uniform Transfers to Minors Act (UTMA) account. Only two states (Vermont and South Carolina) don’t have the UTMA. All 50 states do have the UGMA.

The major difference between the two account types is that the UTMA can hold real estate and other physical property, while the UGMA can’t. Merrill Edge doesn’t offer physical assets, so the difference is not really important here. Both accounts are custodial accounts.

Benefits of a Custodial Account

With either a UGMA or a UTMA account, you’ll be able to capture some serious tax advantages. Under federal law, the first $1,050 in earnings in a tax year in a UGMA/UTMA is tax free. The next $1,050 in earnings is taxed at the child’s tax rate, which is usually lower than the parents’ rate.

A few caveats are in order:

- The age at which this tax benefit stops is 19, or 24 if the minor is a full-time student with little to no unearned income.

- Contributions are irrevocable, so don’t even think about changing your mind.

- Unlike other minor accounts, funds in a UGMA/UTMA can be used for any purpose, not just education.

Custodial Account Fees at Merrill Edge

On top of the tax advantages that custodial accounts come with, Merrill Edge itself charges no fees whatsoever for a UGMA or UTMA account. There are no annual fees, no setup fees, and no closeout charges. Even better, a custodial account at Merrill Edge comes with the same great commission schedule as a regular taxable brokerage account. This means zero trade fees on stocks and ETFs. Options have no base charge, and the per-contract fee is 65¢. Treasury bonds have no commissions, another great perk.

Opening the UGMA or UTMA at Merrill Edge

When you’re ready to open your custodial account, just head over to and click on the red Open an Account button at the top of the page. You’ll get two options on the next page: Help me get started and Show me all accounts.

Merrill Edge Custodial Account

With the first option you’ll be asked a series of questions, and your answers will guide you to a recommendation. The second option will give you a list of accounts, and you’ll simply click on one. You can experiment with the first if you want. Since you already know the account you want to open, you may want to choose Show me all accounts. On the next page, simply click on the Custodial Brokerage link.

When filling out the application, you’ll need particulars on both the minor and custodian, including both Social Security Numbers.

Although Merrill Edge does offer several managed account options, they cannot be used for a UGMA or UTMA account. So you’ll have to make all the investment decisions on your own inside a custodial account at Merrill Edge.

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