All About Estates

How the ‘Hotchpot Clause’ Lost its Groove: the marriage settlement trust and myth of women’s legal disabilities

What is Hotchpot?

In estates law, “hotchpot” is a legal term of art.[1] It is an umbrella term that covers a few related concepts (e.g., a hotchpot clause, common law presumptions of hotchpot, intestacy legislation on the same).

In essence, the purpose of hotchpot is to prevent one beneficiary from receiving more his intended share. It does so by taking into account of all prior advances and testamentary gifts.

For example, if testator John wants the residue of his estate (worth $1,000,000.00) to be shared equally by his three sons Aaron, Bob, and Clark, he might add a hotchpot clause to his will. While John was alive, he gave Aaron an advance or gift of $200,000.00. If there is no hotchpot clause, each son would get $333,333.33 of the residue of the estate, with Aaron actually getting $533,333.33 in total from John. So while John intended to treat his three sons equally, his intention would fail.

With a hotchpot clause, the $200,000.00 advance to Aaron is added to the pot of $1,000,000.00, increasing the estate residue to $1,200,000.00. This number is then split three ways: each son gets $400,000.00. Finally, the $200,000.00 prior advance is deducted from Aaron’s share. The end result: Bob and Clark get $400,000 of the residue while Aaron gets $200,000.

As you can see, the concept behind hotchpot is simple, and its goal of equal distribution is fair. So why are the majority of existing cases on hotchpot “English and old”[2], with fewer cases decided on this matter in each passing year?

The Myth of Women’s Legal Disabilities

While there are multiple reasons for why hotchpot isn’t popular in modern Canadian estate planning, one reason is historical. The concept of hotchpot is ancient, tracing its roots to 12th century English law, and possibly even earlier[3].

One of Ontario’s oldest cases on hotchpot, Re Nordheimer[4], dates back to 1913. It illustrates a popular use for these clauses: the marriage settlement.

Historically, married women suffered severe legal disabilities. As the fiction goes, when a woman marries, her legal identity merges with that of her husband. Therefore, women had no independent right to own property, no rights over their children, nor an entitlement to their own earnings (unless they were widowed).

In essence, women were objectified by this damning myth. Just as a table could not own a chair, women were unable to own assets because they themselves were treated as such. They were passed from fathers to husbands, with the change of their last name reflecting this change of ownership.

How could a father ensure that his daughter could have some pocket money (independent of her husband) while under the disability of marriage? Enter the marriage settlement.

In the second half of the 17th century, it became common for any well-to-do patriarch to make marriage settlements. This is a type of trust engineered to give an allowance to married daughters. This way, she has pocket money until she dies. At that point, the trust typically dissolves and its assets passes to her husband and/or children.

The eldest heir of a family naturally inherited the majority of the family fortune primogeniture. Because these eldest sons were capable of passing on the father’s last name, they enabled their father’s dynastic ambitions.

Where daughters and younger sons are concerned, a father still typically wanted to split what little assets would go to them evenly. This is where the hotchpot clause came in. As part of the marriage settlement, these clauses were used to equalize the distribution of a father’s wealth between daughters who were married at different ages, and younger sons who may not yet be financially independent.

The Take-away

In present day Canada, the myth of marriage-related legal disability is dispelled thanks to 19th century suffrage and other reform movements. Women now have the same substantive rights as men. Because married women can now provide for themselves, and are capable of owning assets and money, there was no longer a need for a marriage settlement trust. When this need vanished, so did the corresponding need for hotchpot clauses.

The evolution of hotchpot provides an interesting illustration of the fact that laws are created to deal with complex issues in society. As society itself evolves, so do our laws. In this instance, the changes associated with civil rights were so great, a historically common legal instrument fell into disuse.

Does this mean the end of hotchpot? Not necessarily. Where one common use for a legal concept ceases to exist, a different one may pop up in the future. In this sense, our common law’s neglect of hotchpot may mean that when a new use for them is discovered, modern courts will have an easier time distinguishing between old doctrines and creating new ones.

Will there be a future for hotchpot in Canada? Only time will tell.

 

[1] Corina S. Weigl, “Hotchpot Clauses – A Primer”, Fourth Annual LSUC Estates and Trusts Forum (20-21 November 2001) at 1.

[2] To borrow the phrase employed by the Alberta Court of Appeal in Plamondon v Czaban, 2004 ABCA 161 at para 46, 8 ETR (3d) 135.

[3] Weigl, supra note 1 at 1.

[4] Nordheimer, Re (1913) 14 DLR 658, 1913 CarswellOnt 848 (Ont SC).

About Tyler Lin
Tyler Lin completed his articles at de VRIES LITIGATION LLP. His practice focuses on estate, trust and capacity litigation.

0 Comments

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.