ELIZABETH MAY RAMUS v CLAIRE LOUISE HOLT & Ors

Under the Inheritance (Provision for Family and Dependants) Act 1975, a surviving spouse’s interest under a discretionary or terminable trust may constitute reasonable financial provision. The question is fact-specific and requires assessment of all statutory factors.

A Duxbury calculation is a useful tool, not a rule. It must be applied flexibly, and the recipient is generally expected to expend both capital and income where a lump sum is required for no specific purpose. Reasonable provision does not become unreasonable merely because trustees are personally unpopular or because their discretion creates some uncertainty. The court has no power under the Act to remove trustees of an existing settlement merely by making consequential orders.

The claimant, the widow of Christopher Stewart Ramus, sought provision under the Inheritance (Provision for Family and Dependants) Act 1975. Her late husband’s will gave her a life interest in the income of the residuary trust, but permitted the trustees to terminate that interest and, in some circumstances, exclude her from the discretionary class.

She argued that the trust arrangement was financially precarious and sought either a guaranteed minimum income or replacement of the trustees with independent trustees. The defendants contended that she had substantial resources, including sufficient capital to buy a suitable home and meet her needs for life. The central issues were whether the will failed to make reasonable financial provision and whether the court could remove or replace trustees under the Act.

1. Claim dismissed. The will made reasonable financial provision for the claimant in the circumstances of the case.
2. The statutory inquiry involved two stages: whether reasonable financial provision had been made, and, if not, what order should be made. The claimant’s resources and needs, the beneficiaries’ position, the deceased’s obligations, the size and nature of the estate, conduct, and the special spouse-related factors under s.3(2) were considered as at the hearing.
3. An interest under a discretionary or terminable trust is not inherently insufficient provision. The question is fact-specific. Here the claimant had assets of approximately £1.63 million after allowing for capital gains tax. After purchasing a suitable home for approximately £750,000, she would retain about £880,000, including a retirement fund of about £488,000.
4. The claimant’s proposed approach of preserving all remaining capital while obtaining income from the trust was incorrect. A Duxbury calculation was a useful guide, to be applied flexibly, but the claimant was expected to use both capital and income. Even allowing for longevity and flexibility, her resources substantially exceeded the fund required to meet her asserted income shortfall.
5. The claimant’s unsecured £50,000 loan to her son, made while asserting financial need, was relevant conduct under s.3(1)(g). It was inconsistent with a claim based on financial anxiety. Her freedom to leave her own estate to beneficiaries of her choice was not itself relevant conduct.
6. The trustees were bound by their fiduciary duties. Termination of the life interest required unanimous action. They had to act responsibly, in good faith, impartially, and only on relevant considerations. The letter of wishes required proper regard but was not binding.
7. Section 2 did not confer jurisdiction to remove trustees of an existing settlement. The implied power to appoint trustees under s.2(1)(d) applied to a new settlement, while s.2(4) supplied only consequential or supplemental powers necessary to give effect to an order or ensure fairness between beneficiaries.