Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Abeyance

What it is:

In the strictest terms, abeyance means temporary inactivity. In the finance world, the term generally refers to unknown ownership.
 

How it works (Example):

Let's say John Doe owns an empty lot in City XYZ. He dies without a will or trust in place. John's brother, cousin, uncle and best friend all claim that John told them they could inherit the lot.

While the matter goes through probate, the lot is in abeyance. That is, it is unclear who owns the property. Accordingly, it is unclear who is responsible for the upcoming property tax payment or for the outcome of the lawsuit John was facing from a person who was hurt while trespassing on John's property.

Why it Matters:

Courts often deem assets in abeyance when ownership is unclear. People also set up trusts that do not convey assets until the beneficiary fulfills certain obligations (for instance, no money for the grandson until he completes college or reaches age 30).