What’s mine is mine, what’s yours is mine?

The Supreme Court has today handed down a landmark judgment in the case of Standish v Standish concerning when non-matrimonial property can become “matrimonialised” in the context of divorce and financial remedy proceedings and, thereafter, subject to the principle of sharing.

Property that is considered matrimonial in nature is that which has been generated during the marriage, often by the joint endeavours of the parties which need not be financial in nature. I.e. if one party is the breadwinner and the other the homemaker, the court will not discriminate between those.

Non-matrimonial property usually includes assets owned before the marriage or received by way of inheritance during the marriage. Those assets are not subject to sharing but may still be invaded by the court to meet needs.

However, the situation is usually far from straightforward as assets which were non-matrimonial at the outset could become “matrimonialised” in part or in full. Take the examples of a business owned prior to the marriage which becomes hugely successful after the marriage as a result of one of the parties being able to devote significant time to this because the other is raising their children, or a rental property owned by one party before marriage which is then managed by the other with the rent funding the family outgoings.

Adam Maguire, a partner specialising in the financial issues arising on divorce in national law firm Clarke Willmott’s Birmingham family team says “this case will be of importance to many as they undertake estate and other financial planning, transferring assets between spouses or utilising those assets in a way which might render them as matrimonial property, regardless of whether a divorce is anticipated or not.”

By way of background, this case concerns the very wealthy couple, Anna and Clive Standish. In or around 2017, Mr Standish transferred non-matrimonial assets worth £77.8 million to Mrs Standish as part of a tax planning scheme which was ultimately never implemented and divorce proceedings were later commenced.

The judge at first instance determined that those assets were matrimonial as they had been transferred into the wife’s name but divided them unequally with the husband receiving 60% to reflect his unmatched contribution.

The case then went to the Court of Appeal which decided that the transfer did not make those assets matrimonial and that at least 75% of the assets transferred in 2017 were non-matrimonial. The reduction in the wife’s award from £45 million in total (taking account of other assets as well) to £25 million is reportedly the largest reduction in a divorce award ever ordered in this country. The wife, unsurprisingly, appealed that.

The Supreme Court has upheld the decision of the Court of Appeal and dismissed the wife’s appeal which ultimately means that legal title is less important than the source of those assets when determining whether an asset is matrimonial or not in the context of a divorce.

Adam continued: “While this landmark ruling may provide some comfort where tax and estate planning has taken place and there have been transfers between spouses, we would still recommend caution and that legal advice be taken alongside tax and wealth planning advice to ensure that assets are fully protected from being subject to sharing in the event of a later divorce.

The Family Court remains a discretionary jurisdiction and the court is required to take account of the circumstances in each case. Pre and post nuptial agreements remain the best way of recording intentions and setting out what should be considered matrimonial or not.”

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