On 2 July 2025, the Supreme Court ruled on when non-matrimonial property becomes matrimonial in financial remedy proceedings, highlighting the need for collaboration between estate planners and family lawyers.
The Supreme Court decision in Standish, handed down on 2 July 2025, dealt with this issue arising in financial remedy proceedings in divorce or civil partnership dissolution:
When does non-matrimonial property become matrimonial property in the context of financial remedy proceedings, and how should the sharing principle be applied to such property?
In asking that question, the court grapples with a common scenario when wealth accrued prior to a relationship or from a source outside of the parties’ relationship, which is held by one of the parties only, is transferred to the other spouse during that marriage. It may often be a step considered as part of a plan to structure wealth for estate planning purposes.
In answering that question, the case shines a light on why it is vital for estate planning professionals and family lawyers to work together when helping families structure their wealth whilst identifying, and minimising, the impact of a relationship breakdown.
Although this is a ‘big-money’ divorce, the principles can be applied to all cases.
A reminder of the background of Standish
The family wealth was £132 million. A second marriage for both, the husband brought into the marriage significantly more wealth than his wife.
During the marriage, the husband transferred £77.8 million, previously held in his sole name, to his wife as part of a tax planning exercise.
The parties subsequently separated.
Journey to the Supreme Court
At first instance Mrs Standish argued that by transferring £77.8 million of his resources into her sole name, her husband intended for that element of his wealth to be shared and divided 50:50.
She argued that of the £132 million overall assets, £112 million was capable of being divided equally as ‘matrimonial property’, a significant proportion of this being made up of the £77.8 million transferred to her during the marriage.
The judge agreed that the £77.8 million was ‘matrimonial property’, and so subject to the ‘sharing principle’ with other resources. However, the judge ordered that the £77.8m, although ‘matrimonial’, was derived from an unmatched contribution by the husband. As such it should not be shared equally.
The court awarded her £45 million. After a 15-year marriage, this was approximately one third of the parties’ total wealth, and 40% of the 'matrimonial property’ (which included the £77.8m).
In the Court of Appeal, Mrs Standish sought to appeal - seeking an uplift to nearer 50%.
This claim for more backfired. Her husband cross-appealed, arguing that the money was acquired before the marriage and so should be deemed to be a ‘non-matrimonial’ asset and not be subject to a sharing claim at all.
The Court of Appeal held that the £77.8 million transferred to the wife was not transformed into ‘matrimonial property’. It held that 75% of the £77.8 million resources were ‘non-matrimonial’. Only 25% was ‘matrimonial property’ and so shared equally.
The court reduced the wife’s award from £45 million to £20 million. This is believed to be the largest ever reduction in UK divorce history.
Permission to appeal to the Supreme Court was granted to Mrs Standish in October 2024. The Supreme Court heard the case in the Spring of 2025. The issue for the court on divorce or civil partnership was
“When does non-matrimonial property become matrimonial property in the context of financial remedy proceedings, and how should the sharing principle be applied to such property?”
Why does this matter?
The Supreme Court said that ‘non-matrimonial property’ “… is typically pre-marital property brought into the marriage by one of the parties, or property acquired by one party by external gift or inheritance – and matrimonial property – which is property which comprises the fruits of the marriage, reflects the marriage partnership or is the product of the parties’ common endeavour”.
In simple terms, if an asset is ‘matrimonial’ it means that it has been built up or acquired during a marriage. As a result, the starting point is that the spouses should share equally in all matrimonial property, subject to the criteria in s25 Matrimonial Causes Act 1973 to achieve a fair solution.
Again, in simple terms, if an asset is ‘non-matrimonial’ it means that is has been brought into the marriage by one spouse only. Examples of what may be argued as non-matrimonial resources might be assets acquired before the marriage or relationship, or those generated after it has ended, or assets gained through inheritances or gifts.
Non-matrimonial assets are less likely to be shared – equally or otherwise. It may be possible to argue that that a ‘non-matrimonial’ resource should be ring-fenced or otherwise preserved for the party bringing it into the marriage.
Whether an asset is ‘matrimonial’ or ‘non-matrimonial’, a divorce settlement is always subject to the court’s discretion and the issues outlined in s25 Matrimonial Causes Act 1973.
If there is insufficient wealth, it may not be possible to “ring-fence” or protect ‘non-matrimonial’ assets. But for wealthy individuals, such as Mr and Mrs Standish, the distinction between what is capable of being shared as matrimonial assets – or not – and if capable of sharing – how - is crucial to the ultimate settlement.
Key issues
Legal Ownership
At the date of the divorce, the £77.8 million was held in the sole name of the wife.
Did her ownership at the time of the divorce affect the outcome?
No. The Supreme Court followed the Court of Appeal’s calculation that of the £77.8m, 75% of it was ‘non-matrimonial’.
The Supreme Court found that it is possible, in some circumstances, for non-matrimonial assets to become matrimonial (via a process called ‘matrimonialisation’) if the circumstances demonstrate that, over time, the assets were treated as shared by the parties.
But in this case, this was not the situation, as the transfer was intended to save inheritance tax and ultimately benefit the parties’ children.
Origin of the resource
This is relevant.
Despite being transferred to his wife’s sole name, the nature of the resource, originating exclusively from the husband’s side, was found to have remained his as a ‘non-matrimonial’ asset and the act of transferring the resource did not change its nature to a ‘matrimonial’ asset.
Intention of the transaction and subsequent treatment of the asset
This is important as is an analysis of whether, over time, the parties have treated the asset as shared.
For estate planning purposes, it was presumably incumbent on Mr Standish to divest himself of any interest in the resource. As explained above, the Supreme Court found that the transfer was intended to save inheritance tax and ultimately benefit the parties’ children. It remained his on the divorce. It was not intended to be a joint resource, and the Supreme Court rejected Mrs Standish’s claim that the transfer was a gift to her.
The role of pre-nuptial agreements
A pre-nuptial agreement is an agreement that a couple enter into before they marry or civilly partner, setting out how resources and assets would be split if the relationship ends.
It does not come into play at all if the parties continue to be married for the remainder of their lives.
Some pre and post-nuptial agreements endeavour to provide for the less wealthy spouse in the event of the prior death of the wealthier party, even if the marriage has not come to an end.
However, despite having evidential value in the event of a dispute on death and often containing a clause stating that the intention for the nuptial agreement is to bind heirs, executors and so on, the reality is that estate planning must be properly regulated by a Will and, if required, Trust structures.
A pre nuptial agreement can:
(i) Predetermine the outcome of a divorce settlement, taking away the stress, uncertainty and cost of a court dealing with it if there were a divorce.
(ii) Endeavour to safeguard or ringfence certain assets to protect them from future claims if there were a divorce. Pre nuptial agreements are commonly used if there is a wealth imbalance between the parties.
Although a pre nuptial agreement is not legally binding in England and Wales, since 2010 and the Supreme Court’s judgment in Radmacher v Granatino [2010] UKSC 42, the law has evolved such that a pre or post nuptial agreement will provide significant protection to those seeking to protect assets.
Current law means that the court is not obliged to give effect to the agreement, but the court must give it appropriate weight when exercising its discretion. Subject to certain safeguards being adhered to when entering into the agreement, and provided that the agreement reached is not unfair and does not leave one party or their children in need, those signing a pre nuptial agreement can expect to be held to it. Even if they successfully argue otherwise, it is very likely that their divorce settlement will be lower than that they might have expected, had they not entered into a pre or post nuptial agreement.
For chapter and verse on nuptial agreements see A guide to prenuptial and postnuptial agreements | Weightmans
In their report of 18 December 2024, the Law Commission repeated their recommendations initially made in 2014, for a review of the law relating to nuptial agreements. It is thought that the wind of change is moving towards more certainty of outcome and so a nuptial agreement to become more, not less, likely to be upheld in the future.
In Mr and Mrs Standish’s case, would a pre-nuptial agreement have helped them?
It would have made clear their intentions, at the start of their marriage, about who was intended to retain or receive what if the relationship ended.
It may not have anticipated vast transfers of wealth to the financially weaker party at the outset of their relationship, but even so, it could have been of evidential value to explain to the court what their thinking and intentions were about how their wealth would be divided, if their marriage was to end.
A post-nuptial agreement, entered into during the marriage, may also have helped when discussions began about the transfer of the £77.8 million to Mrs Standish.
Post-nuptial agreements
A post nuptial agreement operates in a similar way to a pre nuptial agreement.
Mr Standish had transferred his resources to his wife with a view to avoiding inheritance tax and with the ultimate plan of those assets being held in a discretionary, offshore, trust for the benefit of the children (although in practice, the trust was not established by the point of divorce).
There is a clear tension between what the family lawyers may seek to achieve (protecting the source of the asset and limiting sharing claims for the gifting party or conversely, promoting sharing claims for the recipient) and what the financial advisors and private client lawyers seek to achieve (minimising tax, and showing that there is no retained interest in the asset).
It is our view that a post nuptial agreement must always be given consideration at a time when an assets transfer is being contemplated even if it is subsequently discounted for fear of it undermining the tax planning exercise.
A post nuptial agreement could make clear whether a transfer of resources is fully intended by the parties to be an outright gift or some form of “conditional” gift arrangement.
This intention may affect a later claim that the source of the wealth protects it from being shared on divorce. Although it could affect the efficacy of the tax planning at least the parties would have clearly weighed up the pros and cons, and any risk of tax issues could presumably be dealt with in the post-nuptial agreement.
A post nuptial agreement is a private document between the parties. It would not be disclosed unless a divorce arose.
Joined up tax and family law advice
At the time of the transfer of assets from husband to wife it seems that all eyes were on the tax planning possibilities this presented.
A balanced review from both private client and family lawyers would have highlighted how the wealth planning may impact a future divorce. Informed decisions could then have been made, with pros and cons calculated and considered.
The tax rationale for transferring the resources was that if the husband transferred assets, the assets would escape UK IHT. It was then intended that after a suitable lapse of time, the wife could place the assets into an offshore discretionary trust. It was an option for the husband to be added as a beneficiary and benefit from them.
An unanswered question remains whether, at the time of transferring the wealth to his wife’s name, Mr Standish had intended to relinquish control (necessary for tax purposes) or whether he intended (through the back door) to keep his options open and become a beneficiary of them once again at a later stage, whether as part of the estate planning exercise or if there was a risk of future divorce.
In the event, this did not need to be determined, as the Supreme Court found that the resources remained his as ‘non-matrimonial’ assets.
As the Supreme Court found that the origin of the resources remained his, Mr Standish will presumably need to revisit his estate planning to achieve the objective he had originally sought to achieve, ie the tax saving exercise.
Guidance
Mr and Mrs Standish have had to incur eye-watering costs, and global attention, to reach an outcome.
Could the dispute have been avoided? Our view is – YES.
The main lesson to be learned: Estate planning must be undertaken with input from expert advisors from across the spectrum. Failure to do so could cost dearly.
Contact our expert family law solicitors for more information regarding the topics covered in this case.