Authorized Investment


DEFINITION of 'Authorized Investment'

Dictated by state laws or by trust instruments designed to restrict the kinds and amounts of investments allowed within a trust. In most cases, an authorized investment list prevents aggressive or speculative investments and insures that the trust is conservatively managed. It is the responsibility of the trustee, or fiduciary, to comply with the list of authorized investments for the trust account involved.

BREAKING DOWN 'Authorized Investment'

While many states have abolished what was known as the "legal list" of investments permitted in trusts, there are still general rules that govern a fiduciary's investment choices and the management of trust assets. These rules are governed both by states and by the Financial Industry Regulatory Authority (FINRA) and the U.S. Securities and Exchange Commission (SEC), and are usually arbitrated in the surrogate or probate courts.

  1. Fiduciary

    A fiduciary is a person who acts on behalf of another person, ...
  2. Trust

    A fiduciary relationship in which one party, known as a trustor, ...
  3. Securities And Exchange Commission ...

    A government commission created by Congress to regulate the securities ...
  4. Beneficiary

    Anybody who gains an advantage and/or profits from something. ...
  5. Trustee

    A person or firm that holds or administers property or assets ...
  6. Financial Industry Regulatory Authority ...

    A regulatory body created after the merger of the National Association ...
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