Inchoate Interest

DEFINITION of 'Inchoate Interest'

Interests, generally property interests, that are likely to vest but have not yet actually done so. The inchoate interest usually is dependent on an event occurring that triggers the interest, such as a relative's death triggering an inheritance. The interest that the inheriting relative has in the inheritance is inchoate until the death occurs, at which point it becomes a real interest.

BREAKING DOWN 'Inchoate Interest'

Note that inchoate interests are not certain to vest. There is still the possibility of a change in circumstances that would prevent the interests from vesting or occurring.

RELATED TERMS
  1. Cliff Vesting

    The process by which employees earn the right to receive full ...
  2. Inheritance

    All or part of a person's estate/assets that is given to an heir ...
  3. Graduated Vesting

    The accelerated benefits employees receive as they increase the ...
  4. Vesting

    The process by which employees accrue non-forfeitable rights ...
  5. Inherited Stock

    A stock that an individual obtains through an inheritance after ...
  6. Vest Fleece

    A slang term used to describe a situation in which a company's ...
Related Articles
  1. Retirement

    Bursting Boomers' Inheritance Dreams

    Waiting for a big payload from an aging relative? The chance of cashing in is lower than you think.
  2. Personal Finance

    ‘I Just Inherited Money’ Now What?

    If you’re lucky enough to inherit money when you're young, here's how to hold on to it.
  3. Taxes

    401(k) And Qualified Plans: Eligibility Requirements

    By Denise ApplebyAny business, including sole proprietorships, partnerships, corporations and government entities may adopt a qualified plan. An employee may not adopt a qualified plan, but an ...
  4. Investing Basics

    How Advisors Can Protect Inherited IRAs

    A new Supreme Court ruling has some financial advisors rushing to set up trusts to help protect inherited IRAs. Is that necessary?
  5. Retirement

    How do you calculate penalties on a 401(k) early withdrawal?

    Find out how to calculate the penalties on early withdrawals from your 401(k), including the impact of the additional 10% tax penalty, vesting and income tax.
  6. Options & Futures

    How Restricted Stock and RSUs Are Taxed

    This form of executive compensation limits how these stocks can be sold. Find out more here.
  7. Financial Advisors

    Why the Wealthy Shy Away from Inheritance Talk

    A recent survey of high-net-worth individuals shows that many avoid talking inheritance with children. Here are some ways to balance the sensitive topic.
  8. Taxes

    Is HD Vest Financial Services Right for You?

    Here's what you need to know about HD Vest Financial Services.
  9. Financial Advisors

    How to Avoid the Inheritance Nobody Wants: Debt

    With the biggest transfer of wealth underway, advisors need to ensure that clients don't also inherit debt.
  10. Financial Advisors

    Tips for Retaining Your Client's Heirs

    It's a good idea to start working with your clients' children early on to forge relationships and hopefully continue to manage that wealth.
RELATED FAQS
  1. What is cliff vesting?

    An employee is considered "vested" in an employer benefit plan, once they have earned the right to receive benefits from ... Read Answer >>
  2. How do I determine capital gain or loss for stocks held in excess of 20 years?

  3. Can I utilize the 1035 exchange provision for an annuity I inherited?

  4. I received a small inheritance last year, will it affect next year’s social security?

    I received social security - $13,000. That is all my income. Nothing else. I received $22,000 in inheritance, lump sum, last ... Read Answer >>
  5. Is there a penalty if you are under 59 1/2 or is there just income tax?

    My husband & his 5 siblings inherited their mother's small annuity.  ... Read Answer >>
  6. How does the IRS want me to report the RMDs I receive from a small non-spousal inherited ...

    Aside from my own 1040, do I need to file tax returns for the stretch IRA in the name of the decedent's trust for my ... Read Answer >>
Hot Definitions
  1. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  2. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  4. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
Trading Center