Hotchpot

Literally, a "mixture of property".

Broadly, hotchpot clauses and rules apply to trusts and wills, to ensure fairness to the beneficiaries by taking into consideration amounts already received when calculating the final amount due to the beneficiaries under the terms of the trust or will.

For deaths before 1 January 1996, the Administration of Estates Act 1925 specified gifts to be taken into account where there was an intestacy or partial intestacy, but these rules were abolished by the Law Reform (Succession) Act 1995 for deaths on or after that date.

A hotchpot clause in a trust document usually requires the value of all the trust's assets, including sums the beneficiaries have already received from that trust, to be added together in order to ensure an equal division between the beneficiaries when the trust comes to an end. If the trustees are exercising a power of advancement under section 32 of the Trustee Act 1925, any advances to a beneficiary must be taken into account when the beneficiary becomes entitled to his or her share of the trust capital. For information on the basis on which advances may be valued, see Practice note, Trustee power to apply capital: section 32 of Trustee Act 1925: Advances must be brought into hotchpot.

A hotchpot clause in a will usually requires the personal representatives to take account of lifetime gifts made to the beneficiaries by the testator, when calculating the amount they are to receive under the terms of the will. For our precedent hotchpot clause for a will, see Standard clause, Will clause: Hotchpot clause.

For further information on the concept of hotchpot, see: