Loans and Advancements to Children and Your Estate
If you give money to one of your children during your lifetime, you could be reducing that child’s entitlement under your will. Loans might be expected to be repaid to the estate and ostensible inter vivios gifts might be seen advances on an inheritance to be taken into account in the division of your estate. Your child’s share can be reduced in two ways: First, by the equitable doctrine of ademption by advancement. Second, by a hotchpot clause located in your will.
Ademption by advancement
The equitable doctrine of ademption by advancement is a legal presumption against double portions for children or those to whom you are in loco parentis. If you make an inter vivos gift to one of your children after executing your will that is substantial or equivalent in nature to that gift or legacy provided for in the will, the doctrine presumes that this was an advance of a part or of the whole of the child’s share of the estate, and that share will be reduced pro tanto to the size of the advance. If, for example, you gave your child $50,000 during your lifetime, and you provide cash gifts of $50,000 each to your children, there would be a presumption that his or her share of your estate would be reduced by $50,000.
This presumption can be rebutted on a balance of probabilities. There will be no ademption when there is sufficient evidence to show your intention was that your child would receive both benefits. A way to show this intention is through a specific provision in the will, such as the following: “None of my beneficiaries shall be liable to bring into account any money, or the value of property, that I may have transferred to any of them prior to my death unless I have indicated in writing at the time of the transfer that is not to be a gift.” 
You can take into account loans or advances made to your children by inserting a hotchpot clause into your will, and the children who received the advances may be liable to repay the estate. Hotchpot calculations are rooted in the equitable presumption against double portions. A hotchpot calculation forces the estate trustee to blend and mix property belonging to different persons, in order to divide it equally. The amount of an advancement made to a particular child is thrown into the common stock of the estate, which leads to notional increase of the estate by the amounts advanced to your children before death, and a corresponding decrease to their respective entitlement.
The following is an example of hotchpot provision that can be inserted into a will: “You, my estate trustee, must include by hotchpot any outstanding loans or advances made to any of my children in calculating his or her share of the estate. Treat this as full repayment of any such loan or advance. I will keep a record of any such loans or advances and you are to rely only on this list that I have approved for the purpose of this clause.”
If you create a list that records the transactions made to your children after the execution of your will, this list cannot be incorporated into your will but it can be used as evidence of the existence of the loans or advancements. The existence and location of a post-will list is simply further evidence of your intention that the advances in the lists are to be taken into hotchpot.
 The doctrine does not apply to other relationships, such as that of spouses. See: Bayoff Estate, Re 2000 SKQB 23, 2000 CarswellSask 25 at para 19.
 The doctrine will not apply if you make the advancement before the creation of a legacy in a will.
 O’Callaghan v. Coady (1912), 8 D.L.R. 316 (P.E.I. Ct. Ch.) at p. 318.
 Cooke v. Cooke Estate 2005 BCCA 263, 2005 CarswellBC 1104 at para 19.
 See: Johnston Estate v. Gemmill 2007 ABQB 235, 2007 CarswellAlta 471 at para 46-47.
 Barrett Estate, Re 2003 ABQB 986, 2003 CarswellAlta 1787; Whateley v. Spooner (1857), 3 Kay & J. 542 (Eng. V.-C.),