Step 1: Prepare for Baking

1. Preheat your oven to 325°F (165°C).
2. Arrange 4 small ramekins in a roasting pan. Make sure they don’t touch each other.

Step 2: Make the Caramel

1. In a small saucepan, combine 1/2 cup sugar and 2 tablespoons water.
2. Place over medium-high heat and bring to a boil.
3. Allow the mixture to cook WITHOUT STIRRING until it turns a light to medium amber color (about 5-8 minutes). Swirl the pan gently if needed.
4. Once the caramel reaches the desired color, immediately remove from heat.
5. Quickly pour equal amounts of hot caramel into each ramekin. The caramel will harden rapidly, which is exactly what you want.

Step 3: Make the Custard Mixture

1. In a large bowl, whisk together 1 large egg, 2 egg yolks, and 1/4 cup sugar until well combined.
2. Add 2 tablespoons rum (or bourbon), 1 teaspoon vanilla extract, and 1/2 teaspoon nutmeg. Whisk thoroughly.
3. Gradually add 1 & 1/2 cups warm milk while continuously whisking to prevent the eggs from curdling.
4. Pour the mixture through a fine-mesh sieve into a measuring cup or bowl with a pouring spout to remove any lumps.

Step 4: Assemble and Bake

1. Divide the strained custard mixture evenly between the caramel-lined ramekins, filling to about 1/4 inch from the top.
2. Carefully place the roasting pan with the filled ramekins in the oven.
3. Create a water bath by pouring boiling water into the roasting pan until it reaches halfway up the sides of the ramekins.
4. Bake for about 45 minutes, or until a toothpick inserted in the center comes out clean. The custard should be set but still have a slight jiggle in the center.
5. Don’t worry if the nutmeg settles on top during baking – this will be the bottom when unmolded.

Step 5: Cool and Chill

1. Using tongs, carefully remove the ramekins from the hot water bath.
2. Allow them to cool to room temperature on a wire rack.
3. Once cooled, loosely cover the ramekins or place them in a container with a lid.
4. Refrigerate for at least 3 hours, but preferably overnight for the best flavor and texture.

Step 6: Unmold and Serve

1. When ready to serve, run a thin knife around the edge of each custard to loosen it from the ramekin.
2. Place a dessert plate upside down over the top of a ramekin.
3. Holding the plate and ramekin together firmly, quickly flip them over.
4. Gently shake or tap the ramekin until the custard releases onto the plate.
5. The caramel will flow over the custard, creating a beautiful sauce.