Legal
Alternative-Asset Acknowledgment & Risk Disclosure
The risks of holding alternative assets in a self-directed account, and your acknowledgments.
1. Purpose
This Alternative-Asset Acknowledgment & Risk Disclosure describes risks of directing an Account into Alternative Assets and is incorporated into the Custodial Account Agreement. By directing such an investment, you acknowledge these risks.
2. Custodian does not vet investments
The Custodian is a directed, non-discretionary custodian. It does not investigate, evaluate, select, recommend, approve, sponsor, or endorse any Alternative Asset, sponsor, or issuer; verify the existence, ownership, title, or value of any asset; or review any offering for compliance with law. You are solely responsible for all due diligence.
3. General risks
Alternative Assets involve heightened risks, including: illiquidity (you may be unable to sell when you wish); valuation uncertainty (no readily available market price; values may be estimates); limited transparency; concentration; leverage; total loss of the investment; and fraud. Unregistered offerings may provide limited information and limited legal recourse.
4. Tax risks within a retirement account
Alternative Assets can create tax within a retirement account, including unrelated business income tax (UBIT) and unrelated debt-financed income tax (UDFI), which are paid from the Account and may require a Form 990-T. Certain assets and transactions are restricted or prohibited (for example, collectibles, and transactions with disqualified persons), and a prohibited transaction can disqualify the Account.
5. Asset-specific considerations
Real estate — all income and expenses must flow through the Account; you may not personally use or perform services for the property. Private equity/credit and private funds — illiquid, long-horizon, subject to capital calls and K-1 reporting. Promissory notes — credit and collection risk. Precious metals — must meet purity and approved-custody requirements. Digital assets — volatile, and subject to custody, security, and evolving regulatory risk. Availability of any asset depends on the Custodian.
6. Your responsibilities
You are responsible for: performing due diligence; ensuring the investment is permitted and not a prohibited transaction; providing required documentation and annual valuations; maintaining sufficient Account cash for fees, expenses, and taxes; and monitoring the investment. The Custodian may decline any asset or transaction.
7. Acknowledgment
By directing an Alternative-Asset investment, you acknowledge that you have read and understood these risks, that you have not relied on the Custodian or Investor Services for advice or diligence, and that you accept sole responsibility for the investment.
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.