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Definition of 'Fiduciary Abuse'
Describes a situation in which an individual who is legally appointed to manage another party's assets uses his or her power to benefit financially in an unethical or illegal fashion.
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Investopedia explains 'Fiduciary Abuse'
Fiduciary abuse can be practiced by agents such as a financial advisor, or power of attorneys. Examples include a financial advisor borrowing funds from client's account in order to take speculative positions in securities, or even a close family member (acting as power of attorney) misrepresenting a legally incapacitated family member as a way to steal assets.
People can protect themselves from fiduciary abuse by taking an active role in their money management or by setting up an irrevocable trust.
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