Standish v Standish and non-matrimonial assets

What is the difference between matrimonial assets and non-matrimonial assets?

The Supreme Court has handed down a landmark judgment in Standish v Standish.  The case concerned a “big money” dispute but the key issue considered by the Supreme Court was the distinction between “matrimonial property” and “non-matrimonial property” and has important implications for a wide range of cases.

“Matrimonial property” are assets built up by the parties during the relationship or which are applied for the benefit of the family.

“Non-matrimonial property” are assets which either party owned prior to the relationship or some other special classes of assets (such as inheritance), which are then kept separate from other matrimonial assets.

In Standish the Supreme Court developed the concept of “matrimonialisation” (the process by which non-matrimonial property can become matrimonial property).

How are matrimonial assets treated on divorce?

Generally speaking, there is a presumption that the fair outcome is for any matrimonial assets to be shared equally between the parties on divorce unless a departure from equality is required in order to meet both parties’ financial needs.

However, when it comes to non-matrimonial assets, the presumption of equal sharing does not apply, and a party can only successfully claim such assets on the basis that they are required to meet their needs.

When does an asset become matrimonialised?

The core issue in Standish was an event that took place in 2017 when the parties were still married.  At that time, the husband transferred £80 million of assets into the wife’s name as part of an inheritance tax planning exercise.  It was intended the wife would use these funds to set up trusts for the parties’ children.  Although the assets were placed in the wife’s name, the trusts were never established.

The assets originated from the husband’s pre-marital wealth and it was therefore not controversial that they had started out as non-matrimonial assets.  The question for the courts was whether these assets had been matrimonialised (i.e. become matrimonial assets) by virtue of having been transferred to the wife.

Supreme Court’s findings on matrimonial assets

In a unanimous decision, the Supreme Court held that in order for non-matrimonial assets to be matrimonialised, it is not enough for them to have simply been transferred from one spouse to the other during the marriage.  Rather, the asset must have been treated by both parties, over a sufficient period of time, as shared – either by being mixed with joint assets or used in a way that shows shared benefit and intention.

In this case, the transfer was made for tax planning reasons and intended to benefit the couple’s children via trusts that were never created. The court found no evidence that the spouses had treated the assets as jointly owned or used them for joint purposes.

The Court reiterated that legal ownership does not dictate whether an asset is matrimonial. Instead, the source of the wealth and the parties’ treatment of it during the marriage are decisive.

What does the Standish vs Standish ruling mean for divorce?

Prior to this decision, it was not uncommon for one party in divorce proceedings to argue (often successfully) that the simple fact that a non-matrimonial asset had been placed into the other party’s name, or into the parties’ joint names, meant that it was rendered matrimonial.  This judgment narrows the circumstances in which non-matrimonial assets can be matrimonialised.

With that said, where any such transfer has occurred during the marriage, the question of whether or not the asset has been rendered matrimonial in nature will be fact-specific, and the focus will need to be on the reason for the transfer and how either party has dealt with or used those assets during the marriage.

If a party is concerned about whether or not their pre-marital assets or other non-matrimonial assets may become matrimonialised, the best way to protect such assets is through either a pre-nuptial or post-nuptial agreement.

Our expert team of family lawyers have extensive experience in advising on all areas of divorce, as well as in preparing pre and post nuptial agreements.