DEFINITION of 'Unauthorized Investment'

Any investment that has not been specifically authorized by a legal trust. Unauthorized investments can technically meet statutory requirements for banks and trusts. However, they may still fail to meet the criteria of the grantor or trustee.

BREAKING DOWN 'Unauthorized Investment'

Unauthorized investments stand in contrast to "nonlegal" investments. These are inherently substandard investments that fail to meet basic statutory requirements of banks and trust departments. Unauthorized investments may merely fail to meet a stated investment objective.

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RELATED FAQS
  1. What are the requirements that a trust needs to meet to be qualified?

    The requirements that a trust must meet to be qualified are as follows: The trust must be a valid trust under state law or ... Read Answer >>
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