Legal
Custodial Account Agreement
The complete agreement governing a self-directed custody account with Institutional Trust Company as directed custodian.
1. Parties and purpose
This Custodial Account Agreement (“Agreement”) is entered into between you (the “Account Holder”) and Institutional Trust Company, a South Dakota non-depository trust company (the “Custodian”), and governs each custody account you establish (the “Account”). For individual retirement accounts, this Agreement is intended to satisfy, and incorporates, the applicable Internal Revenue Service model custodial-account language (Form 5305-A, 5305-RA, or the applicable 5305-series form) as amended for a self-directed account; where any provision conflicts with the required model language for a tax-qualified account, the required language controls for that Account.
2. Definitions
Capitalized terms include: Code (the Internal Revenue Code); Directed Investment (an investment made solely on the Account Holder’s direction); Disqualified Person and Prohibited Transaction (as defined in Code § 4975 and ERISA § 3(14)/§ 406); Alternative Asset (an asset other than publicly traded securities or cash); and Instructions (directions from the Account Holder or an Authorized Representative in a form the Custodian accepts).
3. Appointment of Custodian; directed and non-discretionary
The Account Holder appoints the Custodian to hold assets and process transactions for the Account. The Custodian acts solely as a passive, directed, non-discretionary custodian. The Custodian acts only upon proper Instructions and exercises no investment discretion. The Custodian does not, and will not, provide investment, legal, tax, or fiduciary advice, and is not a fiduciary under ERISA, an investment adviser under the Investment Advisers Act, or a broker-dealer.
4. No investigation, endorsement, or valuation duty
The Custodian does not investigate, evaluate, select, recommend, approve, sponsor, or endorse any investment, sponsor, issuer, adviser, dealer, platform, or service provider, and does not verify the accuracy of any offering document, the existence or ownership of any asset, or its compliance with law. The Account Holder is solely responsible for all due diligence and for the prudence and legality of each Directed Investment.
5. Establishing the Account; identity verification
The Account is established when the Custodian accepts a completed application. The Account Holder agrees to provide accurate information and documentation and consents to identity verification and anti-money-laundering and sanctions screening. The Custodian may refuse to open, may restrict, or may close an Account to comply with law or its policies.
6. Contributions
The Account Holder is solely responsible for determining the amount, type, timing, and eligibility of contributions, including annual limits, income eligibility, and catch-up eligibility for the applicable tax year. The Custodian may accept contributions in cash and, where permitted, by rollover or transfer, and may rely on the Account Holder’s designation of contribution type and year. The Custodian is not responsible for excess or ineligible contributions; correction is the Account Holder’s responsibility.
7. Rollovers and transfers
The Custodian may accept rollovers and trustee-to-trustee transfers as directed. The Account Holder is responsible for the tax treatment of any rollover, including the 60-day and one-per-year rules, and for ensuring eligibility. See the rollovers guide for general information.
8. Investment of the Account; permitted assets
The Account Holder directs the investment of the Account. The Custodian will process Directed Investments in assets it is willing and able to custody, which may include publicly traded securities, cash equivalents, and Alternative Assets such as real estate, private equity and credit, promissory notes, precious metals, private funds, and, where offered, digital assets. The Custodian may decline, in its discretion, to hold or process any asset or transaction for operational, legal, valuation, or risk reasons, and may require documentation before acting.
9. Account Holder responsibility for prohibited transactions
The Account Holder is solely responsible for ensuring that no Directed Investment or transaction is a Prohibited Transaction or involves a Disqualified Person under Code § 4975. The Custodian does not monitor for, and assumes no responsibility for, Prohibited Transactions. A Prohibited Transaction may result in loss of the Account’s tax-advantaged status, taxes, and penalties. See the prohibited-transactions guide.
10. Cash, uninvested funds, and float
Uninvested cash may be held in a custodial deposit or sweep arrangement. The Custodian may earn and retain interest or other compensation on uninvested balances (“float”) as part of its compensation, as described in the Fee & Compensation Disclosure. The Account Holder authorizes this arrangement.
11. Valuation of assets
For assets without a readily available market price, the Account Holder must provide, or cause to be provided, a supported fair-market valuation at least annually and upon request, in a form the Custodian accepts. The Custodian may rely on values provided and is not responsible for their accuracy. If a value is not provided, the Custodian may take reasonable steps, including reporting the last available value or a nominal value, and may distribute or resign as to the asset.
12. Fees and expenses
The Account is subject to the fees in the Fee & Compensation Disclosure, which the Account Holder authorizes the Custodian to deduct from the Account. Taxes, and expenses of Account-owned assets, are obligations of the Account and must be paid from Account funds; the Account Holder must maintain sufficient cash.
13. Distributions
The Custodian will make distributions as directed, subject to available Account liquidity and applicable law. The Account Holder is responsible for the tax treatment of distributions, including any early-distribution additional tax, and for providing withholding elections. In-kind distributions of Alternative Assets require a current valuation and may involve additional steps and fees.
14. Required minimum distributions
The Account Holder is solely responsible for calculating and timely taking any required minimum distribution, including aggregation decisions across accounts. The Custodian may provide administrative information but does not undertake to calculate or ensure RMDs. See the RMD guide.
15. Beneficiary designations
The Account Holder may designate one or more beneficiaries in a form the Custodian accepts; a valid designation on file at death generally controls disposition of the Account, superseding a will. In the absence of a valid designation, the Account passes under the default terms of this Agreement or to the estate. See the beneficiaries guide.
16. Death of the Account Holder
Upon receiving satisfactory notice and documentation of death, the Custodian will administer the Account for the beneficiaries under applicable law and this Agreement, including establishing inherited (beneficiary) accounts as appropriate. Distribution timing depends on the beneficiary category and the account type.
17. Tax reporting
The Custodian will file and furnish tax reports required of a custodian, which may include Forms 5498 and 1099-R and, for unrelated business taxable income, Form 990-T filed by the Account. The Account Holder is responsible for the Account’s income-tax obligations, including any UBIT or UDFI, and for the Account Holder’s own returns.
18. Unrelated business income (UBIT/UDFI)
Certain Account income — for example, from an operating business held through a pass-through entity, or from debt-financed property — may be taxable to the Account. The Account Holder is responsible for identifying such income, for the preparation of any Form 990-T, and for ensuring the tax is paid from Account funds. See the UBIT/UDFI guide.
19. Statements and electronic communications
The Custodian will provide periodic statements. By agreeing, the Account Holder consents to electronic delivery of statements, notices, and disclosures under the E-Sign & Electronic Communications Consent, and agrees to review statements and to report errors within sixty (60) days.
20. Account Holder representations and warranties
The Account Holder represents that: information provided is accurate; the Account Holder has authority to direct the Account; each Directed Investment is lawful and is not a Prohibited Transaction; the Account Holder has performed all due diligence; and the Account Holder will maintain required valuations and cash. These representations are deemed repeated with each Instruction.
21. Authorized representatives and reliance
The Custodian may act on Instructions it reasonably believes are genuine and authorized, including from an Authorized Representative or financial professional the Account Holder designates in writing, until the Custodian receives and has had a reasonable time to act on written revocation.
22. Indemnification of the Custodian
To the fullest extent permitted by law, the Account Holder agrees to indemnify, defend, and hold harmless the Custodian and its affiliates, officers, and agents from any claim, loss, liability, tax, penalty, or expense (including reasonable attorneys’ fees) arising from the Account, any Directed Investment, any Instruction, any Prohibited Transaction, any valuation, or any breach of this Agreement, except to the extent finally determined to result from the Custodian’s own gross negligence or willful misconduct.
23. Limitation of the Custodian’s liability
The Custodian is liable only for its own gross negligence or willful misconduct and is not liable for: the selection, performance, legality, or value of any Directed Investment; acts or omissions of any sponsor, issuer, adviser, or the Account Holder; or losses from following Instructions. The Custodian is not liable for any indirect, incidental, special, consequential, or punitive damages. Nothing in this section limits liability that may not be limited by law.
24. Resignation, removal, and successor custodian
The Custodian may resign, and the Account Holder may replace the Custodian, on thirty (30) days’ written notice. The Account Holder must appoint a successor qualified to hold a tax-advantaged account; if none is appointed, the Custodian may resign, distribute the assets to the Account Holder (which may be a taxable event), or take other reasonable steps. The Account Holder is responsible for transfer costs.
25. Amendment
The Custodian may amend this Agreement, including to comply with law or maintain the Account’s tax status, by notice with a stated effective date; continued use of the Account constitutes acceptance. Amendments required to preserve tax-qualified status are effective as needed.
26. Governing law; tax status
This Agreement is governed by the laws of the State of South Dakota, without regard to conflict-of-laws principles, except that the Account’s tax status is governed by the Internal Revenue Code and related federal law. The parties intend the Account to qualify under the applicable Code provisions, and this Agreement will be construed to preserve that status.
27. Dispute resolution; arbitration; class waiver
Any dispute arising out of or relating to this Agreement or the Account will be resolved by binding arbitration administered by the American Arbitration Association under its applicable rules, seated in Sioux Falls, South Dakota, before a single arbitrator, and judgment may be entered on the award. The parties waive any right to a jury trial and to participate in a class or representative action. The parties irrevocably consent to the exclusive jurisdiction and venue of the state and federal courts located in Minnehaha County, South Dakota for any matter not subject to arbitration.
28. Force majeure; miscellaneous
The Custodian is not liable for delays or failures caused by events beyond its reasonable control. If any provision is unenforceable, the remainder stays in effect. Headings are for convenience. This Agreement, with the incorporated disclosures and schedules, is the entire agreement regarding the Account. Notices are effective when delivered as provided by the Custodian. The Account Holder may not assign the Account except as permitted by law and this Agreement.
29. Acknowledgment
By opening or maintaining an Account, the Account Holder acknowledges having read and agreed to this Agreement, the Fee & Compensation Disclosure, the Alternative-Asset Acknowledgment & Risk Disclosure, and the ERISA & Fiduciary-Status Statement.
Educational only. This page is general information, not individualized investment, legal, or tax advice. Rules depend on your account type, transaction, tax year, and circumstances — consult a qualified professional.