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Definition Of Nonlegal Investment:


A security of sub-investment quality made by a legal representative that does not conform to requirements of defined statutes.
Nonlegal investments are typicallysecurities that are not in compliance with statutory regulations for trust investments.They are not the same as unauthorized investments.Mandatory legal-list states provide a set list of investments in which a fiduciary must invest; permissive legal-list states provide a list of investments in which a fiduciary may invest. If the fiduciary invests in property or securities not on the list, it becomes their duty to provide the proprietary of the investment. Some states will permit their trusts to hold nonlegal securities ifthey werepreviously legal investments whose status was altered by a changein lawor ifconditions have arisen since their purchase that would make the purchase not legal at the current time.

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