Inchoate Interest

See: Inchoate. See: Interest. Put 'em together.

The word “inchoate” means “not fully formed.” Applied to finance, an inchoate interest represents a right or ownership that is implied, but hasn’t yet vested.

Your parents own a profitable petroleum jelly wholesale business. You are the only child and they are getting up there in years. Once they pass away, you’re in line to inherit the business. But you don’t own it yet. Your interest in the firm is inchoate. You need to wait for something to take place (their deaths) for your claim to become a reality.

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