Financial Provision For A Spouse – Ramus v Holt (2022)

Although the law protects a person’s right to testamentary freedom, it also recognises that in certain circumstances for certain people the law should intervene to do justice.

Under the Inheritance (Provision for Family and Dependents) Act 1975 an applicant from specified classes of people can make a claim against the estate where no or inadequate financial provision has been made for them under a Will or the rules of intestacy (where there is no Will).

The first class of people this protection is afforded to is the spouse, who tend to get more in such claims given the higher standard under the Act, which is not limited to maintenance.

Section 2(a) of the Act states the spouse is entitled to:

such financial provision as it would be reasonable in all the circumstances of the case for a husband or wife to receive, whether or not that provision is required for his or her maintenance

Normally a spouse would be entitled to outright provisions from the estate. However, in the recent case of Ramus v Holt (2022), the court were called upon to decide whether a life interest was sufficient financial provision for the spouse.

The Facts

Mrs Elizabeth Ramus was married to Mr Christopher Ramus for some 48 years in 1972. They had two children. Mrs Ramus had decided in 2019 to leave Mr Ramus. Sadly, Mr Ramus committed suicide on 23 June 2020. The last Will was made on 30 April 2014 with various codicils changing the identity of the executor and trustees.

Save for personal chattels, Mrs Ramus was also left a life interest in the residual estate to be held on trust.

The trustees were give power to apply capital for Mrs Ramus’ benefit but also had the power to terminate this life interest. The balance of the residuary estate was then held on a flexible discretionary trust for ‘discretionary beneficiaries’ to including the children, grandchildren, as well as Mrs Ramus (although the trustees had the power to exclude her benefitting).

There was also a Letter of Wishes made on 20 September 2019. Which gave non-binding guidance on how the trustees were to exercise their discretion and included:

2.1 My current matrimonial circumstances are uncertain. If my wife survives me I still wish that she will have a right to income from the Trust Fund to the extent that it prevents hardship and enables her to maintain her lifestyle. I would like this to continue for as long as you feel necessary. If her own resources are such that she does not require that income then you should consider exercising your powers to remove her right to income in all or part of the Trust Fund.

2.2 I do not wish for my wife to receive capital payments from the Trust Fund in order to protect the fund for future generations.

2.3 If the trust contains my share of the family home and my wife wants to continue living in the house, then she will have the right to do so, subject to Liz keeping the property in repair and paying the usual outgoings and insurance premiums. If Liz wants to sell the family home and buy another house I would like you to co-operate with that sale and to buy another property for my wife to occupy as the family home.

2.4 If my wife remarries or enters into a civil partnership or cohabits as if she were married or in a civil partnership, I ask that you consider making no further distributions from the Trust Fund to her and preserve the remaining funds for my children and grandchildren

The estate was worth just over £1,000,000. At the time of the matter, Mrs Ramus was 77 years old. She had assets of about £1,600,000 and a monthly income of £1,700. She required a property (about £750,000) and a sufficient monthly income (for her expenses of about £5,200). She was concerned that her strained relationship with the trustees (including her daughter) was such that they would not exercise their discretion in her favour. She therefore made a claim to ensure she was guaranteed sufficient income from the trust to meet her outgoings. Mrs Ramus was not intending to make a claim to a lump sum and therefore interfere with the potential inheritance of the other discretionary beneficiaries.

The Decision

The starting point was:

An interest in a discretionary trust was capable of amounting to reasonable financial provision for a surviving spouse. Whether it did so was a matter of fact in each case. 

In Cowan v Foreman (2019) it was arguable that a life interest under a discretionary trust was not reasonable financial provision.

Also applying the divorce cross-check (i.e. what would Mrs Ramus have received if she and Mr Ramus had been divorced on the date that he died), she did not present a case on compensation or sharing. She had already received more than half of the matrimonial assets (about 2/3) and was unlikely to have received additional monthly maintenance payments.

The court stressed that the Duxury tables were a useful tool/guide, and that once applied it was clear that Mrs Ramus’ own assets were sufficient to generate the income she required. Her annual income shortfall was about £30,000 and income of £100,000 could generated from a capital sum of £880,000. In fact Mrs Ramus would only need a lump sum of about £220,000 to generate the £30,000 annual income.

The court concluded that:

Given Mrs Ramus’ own assets, there was nothing unreasonable in her having a life interest in the trust fund, nor in the trustees having power to terminate that interest. That power was subject to the fiduciary obligations referred to above. The trustees had no intention of acting otherwise than in accordance with those obligations, which were in any event subject to the Court’s control. If it were being suggested that provision of this sort was inherently unreasonable, that was plainly incorrect: see Cowan v. Foreman, in particular at [60] where it was said that “each case is fact specific and must be considered in the light of the relevant factors”. In this case, the factors of magnetic importance were that the value of Mrs Ramus’s own assets significantly exceeded that of the estate and that she had sufficient to meet her needs.

Mrs Ramus’ claim was therefore dismissed.

Final Words

A spouse seeking to make a claim for reasonable financial provision should not be complacent and assume just because they fall into a special category of claimants that their awards can be guaranteed. The court went to pains to stress that each case must turn on its own individual facts and in Mrs Ramus’ case, the fact that she was wealthier than the estate could not be overlooked. It was also rather concerning that when asked how much she actually needed from the estate to supplement the shortfall in her income, Mrs Ramus was not able to confirm any actual figures. Accurate and detailed financial evidence is highly relevant to such cases and should be sought at the earliest opportunity in support before expensive and time consuming litigation is embarked on.

If you need legal advice relating to Inheritance Act claims, you can discuss your situation with our specialists today by calling us on 0330 822 3451 or requesting a call back.