In the recent Ramus v Holt case, the widow of the deceased brought a claim under the Inheritance (Provision for Family and Dependants) Act 1975, to remove their daughter as a trustee.
Using this case as an example, the article below investigates whether the court has power to remove a trustee under this act.
The deceased's will provided a life interest in the residuary estate for Mrs Ramus, the deceased’s widow. However, there had been a relationship breakdown between Mrs Ramus and the deceased, which involved preparations for separation and divorce.
In a letter of wishes prepared shortly before his death, the deceased asked the executors and trustees to help Mrs Ramus maintain her current lifestyle and grant her a life interest in the marital home. If the trustees concluded that she no longer required income from the trust, or if she remarried or cohabited with another, they had express power to terminate the life interest.
Mrs Ramus brought a claim under the Inheritance Act 1975, seeking reasonable financial provision as she was concerned that the trustees might terminate her life interest. She also sought the removal of her daughter, with whom she had a strained relationship, as a trustee.
Although a letter of wishes is not binding on the trustees in regard to the use of the trust, the trustees in this case all stated at trial that they would uphold the deceased’s wishes.
The court took many factors into consideration before making a decision, including the financial resources and needs which Mrs Ramus had or was likely to have in the foreseeable future and any obligations and responsibilities which Mr Ramus had towards Mrs Ramus.
Applying the notional divorce test, the court noted that Mrs Ramus already owned almost two thirds of the matrimonial assets. Mrs Ramus held over £1,600,000 in cash and investments.
Although her monthly expenditure was significantly higher than her monthly income, the court concluded that she had ample assets to buy a house, cover her lifetime needs and still have a substantial capital cushion. The court rejected Mrs Ramus’ claim and held that the deceased had made reasonable financial provision for her under his will.
In regard to the application to replace one of the trustees, the judge held that ‘reasonable financial provision from the estate of the deceased does not become unreasonable financial provision because of the identity of the trustees’. The judge concluded that in any event, the Inheritance Act 1975 did not give the court jurisdiction to remove trustees.
It is also relevant to note that two of the other trustees were professional trustees. A unanimous decision would be needed to stop any income payments being made to Mrs Ramus and therefore the risk of her relationship with her daughter impacting this decision was low.