Standish v Standish Supreme Court - non-matrimonial asset splitting in divorce

Standish v Standish – originally known for the largest ever reduction of a divorce award, now the landmark Supreme Court ruling has delved into the meaning of matrimonial and non-matrimonial property, together with the concept of matrimonialisation. 

Standish v Standish Supreme Court case summary

The parties in this case were married just short of 20 years. The husband had significant wealth prior to the marriage due to a successful career, and the wife had relatively modest assets. Shortly before the parties divorced, the husband transferred to the wife investments of £77.8million, as part of a tax planning exercise, which in the husband’s case had always been non-matrimonial property.

The trial judge within the financial proceedings held that the assets were matrimonial property, having become so by virtue of the transfer, and the wife was awarded assets worth £45 million, taking into account the original source of wealth as a general factor.

Both parties appealed. On appeal, the Court of Appeal held that the assets that were given to the wife in 2017 were not matrimonial property. The wife's entire award was lowered by 40% to £25 million when it was determined that at least 75% of the assets were not marital. The wife appealed to the Supreme Court.

Supreme Court judgment

The wife’s appeal was dismissed, and the Supreme Court confirmed the following:

• There is a distinction between non-matrimonial and matrimonial property and the court upheld that the legal title is not determinative for classification.
• The sharing principle does not apply to non-matrimonial property (no comments were made about needs/compensation), so non-matrimonial property should not be divided as a starting point.
• The starting point is for matrimonial property to be shared on an equal basis (although you can depart from that depending on the circumstances).
• The concept of ‘matrimonialisation’ was supported whereby non-matrimonial property can convert to matrimonial property. However, whether this has occurred will depend on an assessment of how the parties have treated the asset in question.
• The transfer of assets into one spouse’s name to save tax will not of itself constitute matrimonialisation.

Considerations

Whilst the case has provided guidance on non-matrimonial property and how it should be dealt with, arguably it has left us with more questions than answers. Take the facts of Standish, but instead of the parties divorcing shortly after the payment, they separated many years after. Whether that property has become matrimonialised will depend on how the parties have treated it during the marriage. But what if the intention at the time was to keep it non-matrimonial, but over the years it becomes matrimonial – what is the threshold required to prove this? It is on the party asserting that the property is non-matrimonial to evidence this – an important consideration for clients and practitioners to consider – separate bank accounts and supporting documents will come in handy. But how far back we would need to evidence this, is another question.  

Another consideration is the potential role of pre-nuptial and post-nuptial agreements. Whilst not legally binding in the UK, a nuptial agreement can clearly record parties’ intentions when it comes to non-matrimonial property obtained either before or during the marriage.

It is not just family practioners who should be aware of the new ruling – financial advisors and private client practioners should also be aware. Where there are transactions for tax or estate planning purposes, these need to be clearly documented at the time with the intention of the parties recorded to avoid any ambiguity. It may well become crucial evidence in a divorce case later on.

If you are concerned about how this new ruling may affect you or your clients – whether that be off the back of a separation, or a marriage is on the horizon, get in touch. Whatever your circumstances, our family law solicitors can help.