SmartWills.ca
By Peter R. Welsh
March 10th, 2025
What is a Hotchpot Clause and Why is it Used in Wills?
A Hotchpot Clause is a provision in a will or trust that aims to ensure fair and equitable distribution of an estate among beneficiaries by accounting for lifetime gifts or loans made by the testator. The term “hotchpot” literally means “a mixture of property” and has been used in estate planning since at least the 12th century.
The primary purpose of a hotchpot clause is to:
- Equalize benefits among beneficiaries
- Consider lifetime advancements or gifts
- Prevent disproportionate distribution
When implemented, the clause requires executors to add the value of lifetime gifts or loans back into the estate before distribution and then deduct those amounts from the relevant beneficiary’s share. While not universally applicable, it can be particularly useful for parents who have provided significant financial assistance to one or more children during their lifetime.
