The client
A widow in Hawkesbury was named in her late husband's will for a $40,000 cash bequest -- while his $520,000 matrimonial home, carrying a $180,000 mortgage in his name alone, went to his two adult children from his first marriage.
Will's bequest to the widow
$40,000
Her first option under the election
Equalization entitlement instead
$150,000
Available only if she elects it under FLA s.6
Matrimonial home
$520,000, Hawkesbury
$180,000 mortgage, in the deceased's name alone
Children's combined income
$9,200/month
Would carry the refinance if she elects equalization
The problem
Ontario's Family Law Act does not leave a surviving spouse stuck with whatever a will happens to say. Under section 6, when a spouse dies leaving a will, the survivor must affirmatively elect -- within six months, on the prescribed Form 1 -- between taking under the will, or claiming the same kind of equalization entitlement behind an ordinary spousal buyout she would have been owed under section 5 had the marriage ended in divorce instead of death.
What the election actually weighs
- ▸Taking under the will meant a fixed $40,000 bequest, full stop
- ▸Electing equalization instead meant a $150,000 claim against the estate, based on comparing the spouses' net family properties as of the date of death
- ▸If she filed nothing within six months, the law deems her to have taken under the will -- silence is itself a choice
The children, as the will's residuary beneficiaries, wanted to keep the home. Her equalization claim, if she made it, would have to be paid out of that home's equity -- meaning a refinance, not a distribution.
The numbers
Once the widow elected equalization over the will's bequest, sizing the children's refinance to fund it was straightforward arithmetic.
| Refinancing to fund the equalization claim | Amount |
|---|---|
| Existing mortgage balance (deceased's name alone) | $180,000 |
| Equalization entitlement to be raised | +$150,000 |
| New refinance balance | $330,000 |
| Total debt service, children's own income | Figure |
|---|---|
| Payment at the qualifying rate (6.85%), 25 years | $2,281/mo |
| Property tax | $350/mo |
| Heat (lender estimate) | $140/mo |
| Car loan, one of the children | $310/mo |
| Total debt service | 33.5% |
33.5% leaves the children comfortable room on their own $9,200/month income, well clear of what average mortgage payment data shows most Canadian households actually carry -- the refinance itself was never the hard part of this file. Getting the $150,000 figure right, and getting it from the correct statutory election rather than an assumption, was.
The solution
A mortgage agent licensed under Ontario's Mortgage Brokerages, Lenders and Administrators Act treated the FLA s.6 election as a decision for the family's own lawyer to make, and the mortgage as the transaction that had to be sized correctly once that decision was final.
First, confirmed with the estate lawyer which election the widow intended to file, and by when. The six-month deadline on Form 1 was treated as a hard date, not a guideline -- a late or missing election forfeits the equalization option entirely.
Second, held the children's refinance application until the election was actually filed. Structuring a mortgage around a $150,000 figure that might never materialize would have wasted everyone's time if she had ultimately taken under the will instead.
Third, sized the new mortgage to the existing balance plus the confirmed equalization amount, qualifying the children on their own combined income with no expectation the estate itself would ever service the debt.
The outcome
The widow filed her election to claim equalization rather than the will's bequest, the children's refinance funded at 4.85%, and the $150,000 entitlement was paid out at closing.
Because this is an uninsured estate refinance, CMHC's ratio maximums do not apply directly; the 33.5% figure is informational, showing the children had ample room to fund the equalization claim on their own income.
What to take from this file
- 01A surviving spouse's rights on a partner's death are not limited to whatever the will says. FLA s.6 gives a real, affirmative choice between the will and equalization -- and the choice has a hard six-month deadline.
- 02Silence is itself an election. If no Form 1 is filed within six months, the law deems the survivor to have taken under the will (or intestacy) -- there is no third, do-nothing option.
- 03Never size a mortgage around a legal outcome that has not yet been finalized. Hold the file until the family's own lawyer confirms which election was actually filed.
- 04An equalization claim against an estate is usually a cash problem, not a math problem. Once the entitlement is confirmed, funding it is an ordinary refinance calculation on whoever is keeping the property.
Sources
Every regulatory figure in this file traces to one of these primary sources. Client details and anything that varies by lender are illustrative, as flagged below.
- ▸OSFI — Minimum qualifying rate for uninsured mortgages — the minimum qualifying rate — greater of contract rate + 2% or 5.25%.
- ▸Provincial/territorial mortgage-broker legislation fetched directly (bclaws.gov.bc.ca, legisquebec.gouv.qc.ca, fcaa.gov.sk.ca, web2.gov.mb.ca, nslegislature.ca, assembly.nl.ca) plus FCNB's own site for NB and CanLII's index for PE — see notes for per-province method — provincial mortgage regulators and licence titles.
Illustrative in this file — lender-specific, not rules:
- ▸4.85% contract rate — rates move daily; not a quote.
- ▸the $150,000 equalization entitlement and $40,000 will bequest — set by this family's own net family property and will; every estate's figures are individual, not formulaic.
- ▸the TDS figure — this is an uninsured estate refinance, so there is no CMHC ratio ceiling -- the number is informational.
Authority & provenance
How this case file was built
We publish the origin, the verification method and the reviewer for every case file, so you can judge how far to trust it before you rely on it with a client.
Where it comes from
Derived from files handled by Treadstone’s fulfillment desk and from scenarios contributed by partner brokerages. Names, employers, exact amounts and dates are changed so no client or file is identifiable.
Provenance: Composite — a pattern seen repeatedly on fulfilled files, not a single transaction.
What is verified
Every regulatory figure traces to a primary source listed above and was checked against it on the date shown. The arithmetic is recomputed by machine on every rebuild.
Anything that varies by lender is labelled illustrative rather than stated as a rule.
Who reviewed it
Reviewed for Canadian regulatory accuracy before publication, and re-checked whenever a cited rule changes.
Reviewed by: Nicholas Parson, Treadstone Associates — reviews every case file before publication.
This case file is professional reference material for licensed mortgage professionals. It is not advice to a borrower, and it is not a lender commitment. Insurer rules, qualifying rates and provincial taxes change — confirm the current position with the insurer, regulator or lender before you rely on any figure here in a live file.