Real Estate

HELOC and death of spouse

  • Last Updated:
  • Oct 18th, 2020 10:36 pm
[OP]
Newbie
Oct 11, 2010
11 posts
9 upvotes
Toronto

HELOC and death of spouse

My uncle recently passed away unexpectedly and subsequently my aunt was laid off due to company cutbacks. Their house is paid off but they have a HELOC with 250k limit. She was advised by family members to file survivorship at LRO and remove my uncle off the title for estate planning purposes. However, she is scared of losing the HELOC limit/access especially at this time since the HELOC is registered to the house.

1) Is there any harm in leaving my deceased uncle's name on the title?
2) Are there legal obligations to inform the bank about the passing of my uncle? My aunt has survivorship rights and is the sole executor of my uncle's Will.

TIA.
5 replies
Jr. Member
User avatar
Jun 3, 2019
172 posts
137 upvotes
GTA
Gnilkus wrote: My uncle recently passed away unexpectedly and subsequently my aunt was laid off due to company cutbacks. Their house is paid off but they have a HELOC with 250k limit. She was advised by family members to file survivorship at LRO and remove my uncle off the title for estate planning purposes. However, she is scared of losing the HELOC limit/access especially at this time since the HELOC is registered to the house.

1) Is there any harm in leaving my deceased uncle's name on the title?
2) Are there legal obligations to inform the bank about the passing of my uncle? My aunt has survivorship rights and is the sole executor of my uncle's Will.

TIA.
What is the value of the home as this provides a clearer picture of the loan to value of the secured charge on title.
If there are no other mortgages and the 250k heloc is low in comparison to what the home is worth, I believe the bank does not even notice that she has removed her husband from title.
Does her husband hold any other accounts, either individually or joint with her at the bank that holds the heloc? Since she'll need to finalize those accounts they will see the heloc that is in both their names.
Realtor® & Mortgage Agent
Deal Guru
Feb 29, 2008
12594 posts
7827 upvotes
Sorry to hear. What a terrible series of events for your Aunt.
Deal Addict
Jan 15, 2017
3526 posts
2882 upvotes
1. While it may seem like there isn't a pressing need to remove your uncle's name from title of the home, a situation could arise should your aunt suddenly pass away. Right now your aunt is the executor of your uncle's will. By not removing his name, she has decided to delay wrapping up the estate's affairs. Should your aunt suddenly pass away, whomever is the executor for her estate will not be able to remove the uncle's name from title, as they are the executor for the aunt's will and not the uncle's will. Unless the uncle has an alternate executor named in his will, someone will have to petition the court to be named as an Administrator to finish up any outstanding issues with the uncle's estate.

2. Yes, there is a legal obligation (I am sure it is in the HELOC contract) to contact the bank when there has been a materiel change in circumstances. The death of an applicant/lender would certainly qualify. The right of survivorship only applies to assets and not credit instruments. The bank has the right to cancel the HELOC if they wish.
[OP]
Newbie
Oct 11, 2010
11 posts
9 upvotes
Toronto
JayLove06 wrote: Sorry to hear. What a terrible series of events for your Aunt.
:(
skeet50 wrote: 1. While it may seem like there isn't a pressing need to remove your uncle's name from title of the home, a situation could arise should your aunt suddenly pass away. Right now your aunt is the executor of your uncle's will. By not removing his name, she has decided to delay wrapping up the estate's affairs. Should your aunt suddenly pass away, whomever is the executor for her estate will not be able to remove the uncle's name from title, as they are the executor for the aunt's will and not the uncle's will. Unless the uncle has an alternate executor named in his will, someone will have to petition the court to be named as an Administrator to finish up any outstanding issues with the uncle's estate.

2. Yes, there is a legal obligation (I am sure it is in the HELOC contract) to contact the bank when there has been a materiel change in circumstances. The death of an applicant/lender would certainly qualify. The right of survivorship only applies to assets and not credit instruments. The bank has the right to cancel the HELOC if they wish.
Thank you for the good points. I think her pain point is exactly that, uncle's name should be removed but the HELOC access is especially important to her right now. Although you're right, the bank may eventually close or reduce the HELOC. When it rains it pours but it's all business.
trebmember wrote: What is the value of the home as this provides a clearer picture of the loan to value of the secured charge on title.
If there are no other mortgages and the 250k heloc is low in comparison to what the home is worth, I believe the bank does not even notice that she has removed her husband from title.
Does her husband hold any other accounts, either individually or joint with her at the bank that holds the heloc? Since she'll need to finalize those accounts they will see the heloc that is in both their names.
I think the FMV is around 900k but thankfully they are mortgage-free. They only have this HELOC and a joint account at the same bank.
Deal Addict
Jan 15, 2017
3526 posts
2882 upvotes
Gnilkus wrote: ....
Thank you for the good points. I think her pain point is exactly that, uncle's name should be removed but the HELOC access is especially important to her right now. Although you're right, the bank may eventually close or reduce the HELOC. When it rains it pours but it's all business.
....
Executors are advised to put a notice out for creditors advising of the death. The Executor needs to demonstrate that he/she took all reasonable efforts in order to find the debts/creditors of the deceased. Putting out the official notice prevents an unknown creditor from coming back sometime in the future and making a claim against the Estate.

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