Fiduciary Trust Canada
By Thomas E. Junkin
May 10th, 2023
Using The Hotchpot Clause To Solve Life’s Stew— Discover how an ancient clause is helping today’s parents plan a will that makes things fair for all their children.
One wonderful thing about family life is the variety of parent, child and sibling relationships and the ties that bind. When it comes to estate planning, those same relationships—complicated by realities such as blended families, children’s varying financial circumstances, higher needs dependants, divorce, personal injury, or simply bad luck—can present the greatest challenges. It’s also worth noting parents’ increasing support of adult offspring…
Over time, for various reasons, there’s often a mix of unequal gifting of assets or loans to children. As a result, parents often ask: How do I make things fair to all my children when I’m gone?
Enter the hotchpot clause. The more familiar word, hodgepodge, is a sometimes recognized synonym. A hotchpot clause in a will means that when the executor is calculating a beneficiary’s share of the estate distribution, they add any lifetime gifts or advances the beneficiary received to “the pot.” The executor then reduces the beneficiary’s share of the estate by the amount gifted or loaned. To ensure the hotchpot clause fulfils its role in equalizing things among beneficiaries, the will also includes a provision releasing or cancelling any debt owed by a beneficiary.
