A recent high profile divorce case in the news, Standish v Standish, has resulted in a landmark ruling by the Supreme Court clarifying what should be classified as ‘matrimonial’ and ‘non-matrimonial’ assets.  This is something that can be controversial in many divorces, not just those concerning multimillionaires!

Background to Standish V Standish

This case centred on a wealthy couple who were married in 2005.  In 2017 Mr. Standish, a retired investment banker who had amassed his fortune prior to the marriage, transferred £77million to his wife, which he intended to go into a Trust for their children. It was given in this way to minimise tax exposure.  However, Mrs. Standish did not put the money into a Trust before the parties separated in 2020.

When the couple subsequently divorced a few years later, Mrs. Standish claimed that the money was a gift, and should be treated as a matrimonial asset and therefore split 50:50.

Mr. Standish disputed this saying that he never intended this money to be shared, as it was for their children, and he earned the money prior to his marriage. 

However, the court decided that, in giving the money to his wife, Mr. Standish had ‘matrimonialised’ the asset meaning that it would be considered a matrimonial asset.  Judge Moore concluded that the £77m should be split 34% to Mrs. Standish and 66% to Mr. Standish. Mrs Standish was awarded £45m.

Both parties appealed.  Mrs. Standish said that the money was hers as it was a gift.  Mr. Standish said that the source of the wealth should be the deciding factor, as his actions earned it before the parties had married.

A question of whether the asset had been ‘matrimonialised’

The Court of Appeal decided that the previous judgment was unjust as the £77m had been generated prior to the marriage. Mrs Standish’s argument that the money should be shared because it had been transferred to her was dismissed. The Court of Appeal determined that, as the money had been transferred to Mrs Standish for a specific purpose i.e. to benefit their children, and was not intended to be used for them as a couple, it had not been matrimonialised.

It was stated that a fair allowance should be made to Mrs. Standish who was awarded 25% of the £77m and Mr. Standish 75%.

Mrs Standish appealed to the Supreme Court, who ultimately upheld the Court of Appeal’s decision. In the judgment, clear parameters for determining the treatment of non-matrimonial property were set out:

1. There is a distinction between matrimonial property and non-matrimonial property and the source of that property is the key factor in determining its status. Whether something is matrimonial or non-matrimonial should not be determined by who holds the title to it.
2. Non-matrimonial property should not be subject to the sharing principle (although non-matrimonial property would be subject to sharing on the basis of needs or compensation).
3. Even if something starts as non-matrimonial property (such as a previously owned or inherited property) it may become matrimonial property. It is the treatment by the parties of that property that will determine whether or not it should be treated as a matrimonial asset.

So, the question of whether an asset has become ‘matrimonialised’ is at the crux of this case and will have an impact on divorces in the future.

Impact on High Net Worth Divorce

It is important to appreciate that this decision was made in the context of a couple who were extremely wealthy. There were plainly sufficient assets available to meet both of the parties’ needs, although the Court of Appeal did decide that a needs assessment should be undertaken to establish whether the lower award would meet Mrs. Standish’s needs.

Where the available matrimonial assets are enough to meet both parties’ needs, as with Standish, property that is determined to be non-matrimonial will not be taken into account, and will not be shared. However, where the matrimonial assets would not be sufficient to meet both parties’ needs, non-matrimonial property will be brought into play and could be subject to sharing, and former matrimonial home will always be considered a matrimonial asset, regardless of how it was acquired.

Definitions

A matrimonial asset is defined in law as assets and income which are created or earned during the marriage.

A non-matrimonial asset is referred to as an asset which was not created or earned during the marriage. An example of a non-matrimonial asset could be an inheritance received either before or during the marriage, or property acquired before the marriage.

Get in touch

If you would like to contact us about a family law matter, our friendly and experienced family law team would be pleased to hear from you.  You can contact us on 01872 241408 or email info@penderlaw.co.uk