Supreme Court Clarifies Non-Matrimonial Property in Divorce – Standish v Standish

Supreme Court Provides Landmark Clarification on the Sharing of Non-Matrimonial Property in Divorce Standish v Standish.

In a significant new judgment, the Supreme Court has brought welcome clarity to the treatment of non-matrimonial property (NMP) on divorce, particularly in high-net-worth cases. The decision, arising from a dispute over an £80 million investment portfolio, reaffirms that the sharing principle applies only to matrimonial property (MP) and not to NMP, unless that property has been treated as shared by both parties over time.

Background

The case involved a husband (aged 72) and wife (aged 57), both in their second marriages. They began cohabiting in 2004, married in 2005, and had two children. The husband, who had acquired substantial wealth through a successful career in financial services, transferred a portfolio of investments into the wife's sole name in 2017 as part of an inheritance tax planning strategy. These “2017 Assets” were originally valued at £80 million.

The intention was for the wife to place the assets into trusts for the children, but she never did so. Upon divorce in 2020, the ownership and division of these assets became the central issue.

Court Decisions

At first instance, the trial judge held that although most of the 2017 Assets were originally NMP, they had become MP through “matrimonialisation” and should be divided 60/40 in the husband’s favour.

The Court of Appeal disagreed, finding that only 25% of the assets had become MP and were therefore subject to sharing. The husband was awarded 75% of the assets outright, plus half of the remaining 25%.

The wife appealed to the Supreme Court, arguing that the transfer was a gift to her and that all of the assets should be treated as matrimonial.

Supreme Court Judgment

The Supreme Court unanimously dismissed the wife’s appeal, confirming the Court of Appeal’s decision. In doing so, the Court articulated five key principles:

1. Clear distinction between MP and NMP
   MP reflects joint efforts during the marriage; NMP includes pre-marital, gifted, or inherited property. Legal ownership alone is not determinative.
2. The sharing principle applies only to MP
   This principle is now firmly established. NMP is not subject to sharing unless needs or compensation are in play (which they were not here).
3. MP should ordinarily be shared equally
   Deviations from a 50/50 split are possible, but equal sharing remains the starting point.
4. “Matrimonialisation” requires clear intention
   NMP may become MP if the couple treats the asset as shared over time. A mere transfer does not suffice.
5. Tax-motivated transfers do not create MP
   Assets transferred as part of tax
6. planning (especially where intended for children) will not ordinarily be considered shared between spouses.

Implications

This judgment reinforces that the source, purpose, and treatment of property during the marriage are all crucial when determining whether assets should be shared on divorce. Transfers made purely for tax efficiency—without evidence of mutual use or benefit—will not convert NMP into MP.

For practitioners, the decision provides greater certainty in advising clients on asset protection, particularly those entering second marriages or with significant pre-acquired wealth.