LMP’s Lucy Hoare and Imogen Lenton consider the issues raised in the Standish v Standish appeal to the Supreme Court and the question of when and how non-matrimonial assets become matrimonial and how it may impact on the division of assets on divorce.
The case involved a retired UBS banker who, to negate inheritance tax, transferred circa £77m worth of non-matrimonial assets to his wife in 2017 (non-domiciled in the UK) with a view to, in due course, setting up offshore trusts for the benefit of the parties’ two children. However, when the wife issued divorce proceedings after 15 years of marriage in 2020, the assets remained in the wife’s name.
When the High Court came to consider the division of the assets in 2022, the Judge divided what he characterised as the matrimonial property unequally in the husband’s favour (60/40), awarding the husband £87m and the wife £45m. This was to reflect the fact that the husband’s pre-marital assets had become “matrimonialised” but also that the assets were derived from an unmatched contribution from the husband.
The wife appealed to the Court of Appeal in 2023 and the husband cross appealed, arguing that the majority of assets, including the transferred c.£80m, was pre-marital. The Court of Appeal ruled in favour of the husband. It held that the High Court Judge was wrong to determine that the entirety of the assets transferred to the wife in 2017 were “matrimonialised” and therefore open to division between the parties. Instead, the Court of Appeal found that 75% of the funds transferred to the wife in 2017 were non-matrimonial property and not subject to the sharing principle. The Court of Appeal stated that the High Court judge’s application of “the sharing principle” in the case had been “flawed” and the wife’s share was reduced by a staggering 45% to £25m (being 50% of the assets which the Court of Appeal found to be matrimonial.)
On 30 April and 1 May 2025 the Supreme Court heard the wife’s appeal with her Leading Counsel highlighting that “the perverse effect” of the Court of Appeal Judgment is that “the wife has almost no entitlement to share in assets that, during the marriage and by the express intention underlying the husband’s gift, she came to own,”. He further argued that if left uncorrected, the Judgment would have significant ramifications in other divorces.
The case sent ripples through the family law space primarily as it raised issues about the definition of “matrimonialisation”, and the application of the sharing principle but also because it highlighted the importance of a holistic approach to wealth planning and lent weight to the endorsement of the efficacy of Pre- and Post-Nuptial Agreements.
The Supreme Court Judgment focuses on providing clarification around the definition of “matrimonialisation” and the “sharing principle” considering in detail the following five principles related to the sharing principle:
1. It recognised the conceptual distinction between matrimonial and non-matrimonial property.
Matrimonial assets are typically assets earned or gained during the marriage; “the product of the parties’ common endeavour”. Such assets are subject to the sharing principle with the starting point being equal sharing. Who holds legal title to the property is not determinative in deciding what is and what is not matrimonial property.
Non-matrimonial assets are typically assets owned before the marriage by one party, or assets of a non-marital source, ringfenced or received as an inheritance during the marriage.
2. The time has come to make clear that non-matrimonial property should not be subject to the sharing principle
In the face of past reluctance, yesterday’s Judgment has made clear that “non-matrimonial property should not be subject to the sharing principle (though non-matrimonial property can be subject to the principles of needs and compensation).” The Supreme Court was of the view that “the distinction between matrimonial and non-matrimonial property becomes largely meaningless if the sharing principle applies to the latter as well as the former.” It is now clear that the sharing principle only applies to matrimonial property and does not apply to non-matrimonial property.
3. Sharing should normally be on an equal basis
The Judgment confirms that “the sharing of the matrimonial property should normally be on an equal basis. Although there can be justified departures from that, equal sharing is the appropriate and principled starting position. Indeed, once non-matrimonial property is excluded, much of the justification for not applying equality in sharing fades away.”
4. What starts as non-matrimonial property may become matrimonial property
“Matrimonialisation” can occur i.e. non-matrimonial assets can become matrimonial and are then subject to the sharing principle and treated as part of the marital assets available for division. The Court of Appeal in Standish was of the view that this concept should continue to be applied but this should be done narrowly. The Supreme Court disagreed and said that “it is neither narrow nor wide” and that “matrimonialisation rests on the parties, over time, treating the asset as shared.”
5. Transfers of assets with the intention of saving tax may not establish sharing
In the context of this particular case, the asset was not treated as being shared between the parties. The intention had been simply to save tax.
Lucy Hoare commented:
“The wife was facing an uphill battle in persuading the appeal courts that the assets transferred to her in 2017 to be put in Trust for the children were matrimonial assets which should be shared. In upholding the husband’s success in the Court of Appeal, the Supreme Court has confirmed that it was right that none of the non-matrimonial portion of the assets were subject to matrimonialisation. Non-matrimonial property is not subject to the sharing principle. The clarity this Judgment offers in relation to the sharing principle is critically important for Ultra-High Net Worth and High Net Worth couples.”
Imogen Lenton added:
“After five years of litigation, this Judgment is likely to be a wakeup call to those divorcing, family lawyers and financial advisors. This is the time for those with concerns about the provenance and the categorisation of assets to seek professional advice. We look forward to reading others’ views and commentary and seeing how the decision impacts future financial proceedings.”
You can read the full Judgment here.
If you have any questions about the implications of Standish v Standish on your divorce, Lucy, Imogen or any member of the LMP team shall be pleased to assist.
