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. Investopedia Says:
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. Related Terms:
Advisor
Beneficiary
Blind Trust
Fiduciary
Irrevocable Trust
Misappropriation Theory
Power of Attorney
Trustee |