Clarifying matrimonial and non-matrimonial assets – A case review
In the ever-evolving landscape of family law, the recent case of Standish v. Standish has brought clarity to the (often complex) distinction between ‘matrimonial’ and ‘non-matrimonial’ assets.
By way of definition, matrimonial assets are financial assets acquired by either spouse during the marriage. Non-matrimonial assets, on the other hand, are financial assets acquired prior to marriage or after separation, without the contribution of the other spouse.
Background and judgement
Standish v. Standish involved an ultra-high-net-worth divorce in which the husband had amassed substantial wealth prior to the marriage, held through a complex web of trusts. In 2017, while the couple was still married and living together, the husband transferred approximately £78m of assets to the wife. The aim was to create a trust to limit the family’s exposure to inheritance tax; however, the trust was never created, and the wife retained the assets in her name. Soon afterwards, she issued divorce proceedings.
In the High Court, the wife argued that the assets were ‘matrimonialised’ when they were transferred to her, so should be subject to the ‘sharing principle’ (i.e. accrued during, or as a result of, the marriage so should be shared between the parties).
The husband contended that he had always intended the assets to be placed in a trust for the benefit of their children and for tax planning purposes. He also argued that the assets were obtained before the marriage, therefore should be considered non-matrimonial.
Initially, the Judge agreed with the wife, advising that the assets should be divided 60:40 in the husband’s favour. However, both parties were unsatisfied with the outcome and appealed the decision.
The Court of Appeal reached a different conclusion. The Judges decided that they could not disregard the source of the assets or the husband’s intentions when transferring them to his wife. As a result, the Court ruled that 75% of the transferred assets were non-matrimonial, so should be retained by the husband. The remaining 25% was matrimonial and the assets were divided almost equally between the parties, as per the sharing principle.
What does this mean for family law clients?
This case highlights that, when the Courts are determining whether an asset is matrimonial, they will look beyond legal ownership. Instead, they will consider the source of the asset and fairness. For an asset gained pre-marriage or via inheritance to be considered matrimonial, there must be a clear intention to share the asset within the marriage.
As the sharing principle does not apply to non-matrimonial assets, these assets can be ring-fenced and may not be distributed between the parties following divorce.
This judgment demonstrates the importance of spouses clearly documenting their intentions when it comes to large transactions and assets during their marriage. It should also encourage all married couples to look into the use of pre-nuptial and post-nuptial agreements to clarify how assets should be treated in the event of divorce. To find out how our family law team can support you, please get in touch on familylaw@attwaters.co.uk or call 0330 221 8855.
