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What is the Hotchpot Rule?




The following blog will outline in simple terms, what the Hotchpot rule is in Succession Law. The Hotchpot rule is quite tricky even for lawyers to get their heads around and to top it all off, the Hotchpot rule differs from State to State.


So, is it a whole lot of Hotchpot? The answer is no. It is legal process used when someone dies Intestate (without a Will). We have outlined what the differences are between the states in a user-friendly table below.


What is the definition of Hotchpot?


Hotchpot is used to describe the process of (essentially) combining property together that is currently owned by different people. This being done for the purposes of re-creating one large pool of assets, that can then be divided ‘equally’ amongst beneficiaries or heirs when a person dies without a Will (without a will = no specific instructions as to who gets ownership over what).


An example


Moe has four children, Homer, Ned, Lisa and Maggie. Homer owns a house in Springfield that was given to him by his dad Moe when Moe was alive.



Ned (Moe’s other son) was given a boat by Moe when Moe was still alive.



Lisa and Maggie (Moe’s daughters) were given nothing.


Moe died intestate (without a Will prepared) (silly Moe).


Hotchpot comes into play.


This means, the value of both Homer’s house and Ned’s boat are recounted for and divided equally amongst Moe’s beneficiaries (all the kids) so it becomes ‘fair’.


Comparing the laws in each State Surrounding Hotchpot


The laws surrounding the use of Hotchpot differ in each State so it is important to seek help from a Succession Law expert to ensure you follow the right process. The following table outlines these differences.


Problems with the Hotchpot rule


As we have highlighted above, Victoria still uses the Hotchpot rule quite frequently, whereas many of the other states around the Country have either abolished the rule or have varied it significantly.


The Victorian Law Reform Commission outlined that the Hotchpot rule has a lot of problems in Victoria. Some of the problems practitioners and individuals have raised include the fact that the rule is considerably outdated, reason being this rule may not necessarily represent the way in which parents benefit their children these days.[3] Furthermore, the Hotchpot rule in Victoria only applies to children of the deceased person, so the benefits received by other relatives in the family from the deceased person need not be ‘given back’ for an equal share to be determined.


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References


[1] https://www.lawreform.vic.gov.au/content/%E2%80%98hotchpot%E2%80%99-benefits-received-during-deceased-person%E2%80%99s-lifetime

[2] Ibid. [3] Ibid.