Can I keep my pre-matrimonial assets –The impact of the recent Supreme Court judgment in Standish v Standish

A question often asked on divorce by clients is can they keep assets that they brought into the marriage. The answer is not often a straightforward one and each individual case will have nuances which the Court will need to consider. However, the recent case of Standish v Standish the Supreme Court has clarified how we can determine if assets are matrimonial in nature and therefore should be shared.

What are matrimonial assets?

Define what a matrimonial asset is then go on to talk about non-matrimonial. Examples of non-matrimonial assets are those acquired before marriage or post separation, inherited funds and gifts received.  The Court will look at the facts of each case to make a determination on how to categorise the asset.

What is “matrimonialisation?”

This is where assets which might ordinarily be classified as “non-matrimonial”  assets becoming part of the matrimonial ‘pot’ and therefore available for division between the parties. This often happens where a spouse uses an asset they had before marriage and intermingles it with matrimonial assets, and therefore it is considered as part of the family pot.  Common examples of these can be where a spouse uses funds acquired before the marriage to purchase a house, holiday, for home improvements or even to support day to day expenses.

The case of Standish

This was a high net worth case where the assets were  hundreds of millions of pounds. Mr and Mrs Standish were married in 2005 and separated in 2020. In 2017, Mr Standish transferred £77.8 million to Mrs Standish for the purpose of creating a trust for their children as part of a tax saving exercise. It transpired that Mrs Standish never set up the trust and therefore held the assets in her sole name.

In the first instance, the Court determined that the £77.8 million that had been transferred to Mrs Standish had become matrimonial, and determined that Mrs Standish was entitled to 40% of the total net assets, equating to £45 million.

This decision was appealed by both parties; Mrs. Standish because she felt she was entitled to more and Mr. Standish against the principle of matrimonialisation. The Appeal Court determined that the assets in 2017 could not be characterised as matrimonial simply because they had been transferred to Mrs Standish, and should not be shared.  The Court reduced the award to Mrs Standish down to £25 million. This was the largest ever downward adjust to an award, and demonstrates the risks of appealing against an order.

Mrs Standish appealed again arguing that the Court of Appeal did not need to exclude some of the non-matrimonial assets to the extent that they did. The Supreme Court dismissed the appeal and confirmed that what was more relevant to the court’s decision is:

• The origin of the assets – in this case the £77.8 million had been accumulated in the main from the business endeavours of Mr Standish;
• The intention of the parties for those assets – in this case Mr Standish had taken professional advice and in order to avoid certain taxes, based on Mrs Standish’s domicile of origin (Australia) the taxes could be avoided by her holding the assets before putting them into trust for the children.

However, the Supreme Court accepted that 25% of the £77.8 million was matrimonial as it was earned during the marriage, and therefore this element of the fund could be shared. Ultimately the Court determined that the award of £25 million was the appropriate amount Mrs Standish should receive.

Impact of the Standish case

Where the courts had previously split matrimonial assets equally and non-matrimonial assets could be excluded from sharing in certain circumstances, the Standish case highlighted that simply transferring assets from one spouse to another was not sufficient in itself to make them matrimonial and in turn eligible for being shared.

Therefore applying this principle to some real life scenarios:

• Inherited money that is earmarked for the children to be put in a trust, even if it is not put into a trust, would remain non matrimonial.
• Whereas, if the inherited money was used during the course of the marriage to purchase a property or home improvements, it is likely to be treated as matrimonial.

Will the Standish case impact me?

Whilst the Standish case was helpful in clarifying how the Court will determine which assets are non-matrimonial and matrimonial, it will have limited application to the vast majority of divorces as it was a high net worth case. Usually, the court is dealing with cases with a far smaller asset pool, where needs and fairness will be more determinative of a settlement.  Where there are insufficient funds to meet the needs of the parties upon separation, the Court will use the non-matrimonial assets to the extent that is necessary to meet those needs, to ensure settlements are fair.

How can Blanchards Law help?

We can assist in protecting your assets prior to marriage or during your marriage, with a pre-nuptial agreement or post-nuptial agreement. On divorce, we advise clients on the strategy and approach to take when assessing whether assets are matrimonial or not.