Divorce can be a daunting process, especially when it comes to dividing finances. The recent high-profile case of Standish v Standish has brought guidance on how key concepts should be applied. It highlights why legal advice is crucial for those bringing wealth and assets into a marriage.
What is matrimonialisation of assets?
When a couple’s assets are divided on divorce, the court considers whether any assets have been “matrimonialised”. But what does this mean and why is it important?
The court looks at the couple’s financial assets and has to work out whether they are “matrimonial” or “non-matrimonial”.
If an asset is matrimonial it means it has been built up or acquired during a marriage. Both spouses on divorce usually have a strong claim to share equally in all matrimonial property. Typically, matrimonial assets include the family home, pensions and savings.
If an asset is non-matrimonial it means that is has been brought into the marriage by one spouse only. For example, this could be wealth built up before the couple even met, it could be an inheritance or a bonus received after a couple have separated. Non-matrimonial assets are less likely to be shared equally and it is even possible to “ring-fence” or protect non-matrimonial assets for the benefit of the spouse who brought the asset into the marriage. Typically non-matrimonial assets include inheritances, family businesses and property that was bought before marriage or after separation.
In certain circumstances, non-matrimonial property can change into matrimonial property because of how the property has been dealt with during the marriage. This is called “matrimonialisation”. A common example is where an inheritance received by one spouse is used to buy a family home or second home for the family to use and enjoy.
Why does this matter to me?
Classifying assets as matrimonial or non-matrimonial is crucial during a divorce, as it determines how the finances will be divided. This division is then formalised in a financial settlement which must be fair and reasonable to both spouses. However, there may be disagreements over which assets should be included in the settlement. For instance, one spouse may argue that an inheritance received before the marriage should not be included. Understanding the difference between matrimonial and non-matrimonial assets can help you navigate this process.
Matrimonial assets will be shared between spouses, often 50:50. This is called the sharing principle.
Non-matrimonial assets are a little more complicated. Often you can ask for them to be excluded from the financial settlement altogether.
However, this is a starting point and not a fixed rule. The court will not always apply the sharing principle, and will consider each case on its facts. Matrimonial assets may be divided unequally in circumstances where there is a couple that does not have sufficient assets to meet their needs. The couple and their children’s needs are always prioritised above dividing assets 50:50. And non-matrimonial property may need to be included in the division of assets again where there are not enough assets to meet each spouse’s needs.
Background to the Standish v Standish case
The Standish v Standish case has been making waves. Picture this: a glamorous couple, a sprawling estate, and a fortune worth millions. When the Standishes decided to part ways, it wasn’t just about who got the mansion or the yacht - it was about redefining what counts as matrimonial property.
Mr and Mrs Standish married in 2005 and had two children together. Both had been married before, and had some independent wealth, but Mr Standish brought very significant wealth into the marriage, which he had acquired during his successful career in financial services. At the time their case came before the court, the family’s total wealth stood at £132 million.
What was at the heart of the drama? £77 million worth of assets transferred from Mr Standish to Mrs Standish for tax planning reasons in 2017. Much of Mr Standish’s wealth had been built up before the couple had met or married.
However, Mrs Standish argued that by transferring £77 million into her sole name, those assets had become “matrimonialised” i.e had changed from non-matrimonial to matrimonial and were now capable of being divided 50:50.
This meant, she said, that of the £132million, £112million was capable of being divided 50:50. The judge first dealing with the case agreed with her. However, the judge used his discretion not to split the £77million equally but instead gave 40% to Mrs Standish. In total, Mrs Standish received £45million.
Both Mr and Mrs Standish appealed and the case ended up in the Court of Appeal.
The Court of Appeal decision
The Court of Appeal allowed Mr Standish’s appeal against the earlier decision, emphasising that matrimonialisation should in fact have been applied more narrowly in this case. The Court of Appeal found that the erroneous application of sharing principle had caused the wealth to be unfairly divided in Mrs Standish’s favour. It remains a key consideration how an asset has come into a family (the source) rather than just whose name it is in.
The Court of Appeal found that 40% of the transferred assets should not have been awarded to Mrs Standish. Instead, there should have been an assessment of how many of the transferred assets were built up during the marriage and the sharing principle should have been applied to those assets only.
The amount Mrs Standish received was reduced from £45 million to £25 million. It is believed that this level of reduction is unprecedented.
The Supreme Court decision
The question the Supreme Court was asked to answer was: When does non-matrimonial property become matrimonial property, and how should the sharing principle (the “50:50 split”) be applied to “matrimonialised” property?
Spoiler alert. Mrs Standish’s appeal was dismissed. And the Supreme Court confirmed that the decision the Court of Appeal had made was the right one.
Why the Supreme Court judgment is important is because it clarifies and lays down the principles that will apply in future cases. We now know that:
- When it comes to matrimonial property, the starting point will be this will usually be shared 50:50 unless there is a very good reason to depart from that equal split
- When it comes to non-matrimonial property, the starting point will be this will not be shared at all and the only way to “invade” those assets is it show that, for example, there are not enough other assets to meet both spouse’s needs (for example, there is not enough matrimonial property to allow them to re-house).
As for matrimonialisation, what matters is how a couple have dealt with any non-matrimonial property during their relationship and whether the non-matrimonial property has been “transformed” into matrimonial property. There are two things to take into account:
- Firstly, did the person bringing in the non-matrimonial wealth intend to share it with their spouse?
- Secondly, have the couple treated that property, asset or wealth as something they both share in?
The passage of time will be a key consideration in cases where these issues crop up.
For Mr and Mrs Standish, just because assets had been transferred between them, the Supreme Court said that this didn’t automatically mean those assets were now matrimonial. In this case, there had been no intention for those assets to be treated as something they both shared in; the transfer was simply about saving tax and that was a benefit that was for their children.
So, although £77 million worth of assets had been put into Mrs Standish’s sole name, that didn’t mean she was automatically entitled to a 50% share of those assets. The test for matrimonialisation was not met. The non-matrimonial property had not been transformed into matrimonial property.
Why do I need to know about Standish?
The Standish case is a “live-action cautionary tale” for anyone bringing wealth into a marriage – it is crucial to get early and clear advice on how that wealth may be distributed in the event of divorce, and the options available to you to protect it.
For couples entering into a marriage with significant pre-marital wealth, a prenup is an effective way to protect that wealth should the worst happen. Prenups are becoming more commonly seen as a practical step, much in the same way as insurance. Properly prepared prenups can help avoid complicated legal disputes and costly legal proceedings.
Pre-nuptial agreements can provide clarity and security. The court will only uphold a pre-nup if it is fair and meets an individual’s needs. It is less widely known that similar protective agreements can also be entered into after, and even many years after, the marriage has taken place. These are known as post-nuptial agreements.
Whilst the Supreme Court ultimately agreed with Mr Standish on the principle of “matrimonialisation”, the substantial financial and emotional cost of the court proceedings (and related publicity!) could have been avoided had Mr and Mrs Standish entered into a post-nuptial agreement at the time the shares were transferred into Mrs Standish’s name, setting out how those shares would be treated on divorce.
When making significant financial decisions during your marriage, especially if these decisions relate to assets that were built or acquired outside the marriage, speak to a family lawyer as part and parcel of the tax and other professional advice you take.
We know the prospect of a post-nuptial agreement will be a challenging discussion to navigate with your spouse-to-be, particularly if your marriage is a happy one, but we can help you through it sensitively with a focus on achieving clarity, security and fairness for the whole family in the “worst case” scenario of divorce.
The Standish case has also introduced a new legal concept – “transformation”. The Supreme Court has said that the important question for any judge trying to work out whether a non-matrimonial asset has been matrimonialised is whether the asset has “transformed” into something that has been shared between two spouses. If, over time, the asset has been treated by the couple as shared, it's likely that it has been matrimonialised and so is subject to the sharing principle (which means the starting point is that it will be divided 50:50 between the couple on divorce).
In short, to maximise the chances of ring fencing - or not sharing - non-matrimonial assets on divorce, it's more important than ever to keep these assets as separate as possible from the family finances.
There are, as always, exceptions. The Supreme Court specifically clarified that a transfer of assets designed to save tax will not normally be treated as matrimonialisation. Which leads us back to where we started – every family is different and tailored, specialised advice is key.
Our family lawyers are experienced both in dealing with wealth protection and in dealing with arguments around matrimonial and non-matrimonial assets. If you would like any advice on financial arrangements on divorce, please contact us.
Please note: This blog was originally posted on 20 August 2024, and updated on 7 July 2025 to reflect the decision from the Supreme Court.