The Supreme Court’s decision in Standish v Standish brings long-awaited clarity to the treatment of non-matrimonial assets on divorce – welcome news for family lawyers, tax advisers, and estate planners.
How did we get here?
Mr Standish entered the marriage with substantial pre-acquired wealth. In 2017, following estate and tax planning advice, he transferred investments worth £77.8m to his wife, intending to settle them into trusts. The trusts were never created, and the wife retained legal ownership. On divorce, she argued the transfer was a gift and should be treated as matrimonial. The husband disagreed.
The High Court initially found in the wife’s favour, treating the assets as matrimonial and available for sharing. Both parties appealed. The Court of Appeal overturned Moor J’s decision, holding that 75% of the assets were non-marital and the remaining 25% should be shared equally. Mrs Standish’s award was reduced from £45m to £25m, said to be the largest reduction on appeal of a matrimonial award in English legal history. She appealed, and it was the Supreme Court that delivered the final word, prompting family lawyers across the country to huddle around their laptops awaiting the judgment.
The Court held that 75% of the fund retained its non-matrimonial character, based on its origin, the tax-driven nature of the transfer, and the absence of any shared intention. The remaining 25% was treated as matrimonial and divided equally.
Crucially, the Court confirmed that legal ownership or inter-spousal transfers do not automatically convert non-matrimonial assets. What matters is how the asset was used and treated during the marriage. This emphasis on conduct and intention over formality provides a clearer framework for determining asset status, particularly in cases involving inherited or pre-marital wealth.
Before Standish, the concept of “matrimonialisation” was murky. The Court has now clarified that using inherited funds to repay a mortgage or contributing to joint accounts may indicate an intention to share. While such actions may seem reasonable during a marriage, they can have unintended consequences on divorce if safeguards are not in place.
How can family lawyers put this into practice?
The key takeaway is that how an asset is treated during the marriage matters just as much as how it is owned. Clients should take early legal advice, keep non-matrimonial assets separate, and clearly record their intentions. Nuptial agreements are more important than ever, and Standish is likely to trigger a surge in enquiries.
The case also highlights the need for collaboration between family lawyers, private client practitioners, and financial advisers. Advisers should ensure their files accurately record clients’ intentions at the time of any significant transfers. Just as we scrutinise conveyancers’ files, we may now look to financial advisers in a Standish-type dispute.
Finally, while Standish limits sharing of non-matrimonial assets, it does not prevent the court from using them to meet needs. Fairness remains the guiding principle and outcomes will, as ever, turn on the specific facts of a case.
This article was first published in Today’s Family Lawyer and is available to read here.
Penny Marshall