Marital Assets in Divorce: The Standish Ruling’s Impact.

The UK Supreme Court has now delivered its highly anticipated ruling in the case of Standish v Standish, clarifying how courts should approach the division of marital and non-marital wealth.  

Although this case is dubbed a “big money” divorce, its implications reach beyond the ultra-wealthy. Many litigants can expect to hear this case referred to in court for years to come.   

The three core approaches to asset division

To understand the significance of the case, it’s key to explore how the courts can divide assets upon divorce:    

Sharing principle  

This is at the heart of the Standish case. This approach sets out that assets acquired during the marriage, regardless of who earned it, may be shared equally, unless there’s a compelling reason not to.  

In their judgment, the Supreme Court made clear that where a case involves a sharing arrangement (where the parties’ needs are adequately met from the marital assets), then only marital assets are subject to this principle. Assets acquired outside of the marriage (typically inheritance, but assets accrued before marriage can also apply) may not be included in this arrangement. 

Needs-based distribution  

This approach is most common and focuses on ensuring both parties, particularly children, are financially supported post-divorce. It prioritises:  

• Housing  
• Living expenses  
• Education needs for children  

This principle ensures a baseline of fairness and sustenance, particularly in lower and middle-income divorces. In such cases, the importance of marital assets is diminished, and the court will utilise all resources to ensure both parties’ needs are sufficiently met.  

Compensation principle  

This approach is less commonly used in recent years because of more extensive guidelines on divorce settlements. The compensation principle addresses any economic disparity caused by the marriage. A common example of this is where one spouse sacrifices career progression to support the upbringing of children. 

Although not directly relevant in Standish, it’s noteworthy that the Supreme Court referred to this principle. It will be interesting to see if compensation arguments increase in popularity as a result.   

Why is Standish v Standish significant?

This case revolves around an £80 million investment portfolio defined as the “2017 Assets”.  

Initially held by the husband, the 2017 Assets were later transferred to the wife as part of a tax planning strategy.  Following separation, the funds remained in the wife’s name. She argued that the 2017 Assets, which were still in her name, should be considered a gift and belong to her outright.  

In the alternative, the sharing principle should apply, and she should receive 50%. The husband disagreed, stating that the purpose of the transfer was purely for tax planning.  

The key legal question was whether these assets, originally considered non-matrimonial property, had become matrimonial property, making them subject to equal division.  

The Supreme Court rejected the wife’s argument that the transfer constituted a gift. Instead, it upheld the Court of Appeal’s view that only 25% of the assets were matrimonial, and that the remaining 75% retained their non-matrimonial character.  

This decision solidifies a more structured and restrictive approach to the sharing principle, especially for high-value cases.  

What is “Matrimonialisation”?  

A key word that came from the case is “matrimonialisation”. This is the process of a non-marital asset becoming marital. 

Matrimonialisation isn’t automatic; it depends on the treatment of the assets during a marriage. If an asset stays separate to the marriage, then it could stay separate during financial proceedings. If an asset becomes an integral part of a couple’s married life, then the court may have the power to split it during divorce. 

Assets may become matrimonialised if:    

• There’s evidence of shared use or intention of shared use  
• The asset becomes part of the couple’s joint economic life over time 

In Standish, there was no evidence of shared use. The husband’s transfer to the wife was for tax purposes, with the plan of placing it into a trust. Therefore, the asset is not matrimonialised. 

What does this mean going forward?  

Like all Supreme Court decisions, there may be several High Court and Court of Appeal rulings which follow to help clarify any unclear or disputed terms and ensure there is consistency in future proceedings.  

Key takeaways   

1. Stronger protection for pre-marital and inherited wealth  

High net worth individuals can have more confidence that assets brought into a marriage or inherited are safe from equal division. Unless, of course, they deliberately integrate the assets into the couple’s shared life.  

2. Clearer barriers to equal sharing  

Courts now have a firmer foundation for distinguishing between marital and non-marital property, providing more predictability in “big money” divorces. 

3. Strategic planning in marriage and divorce  

Couples (and their advisors) will need to think carefully about how assets are managed during marriage. Co-mingling assets, putting them in joint names, or using them jointly could trigger matrimonialisation.  

4. More detailed arguments on assets and conduct  

To apply the Standish principles, parties will need to demonstrate how and why assets have (or have not) become matrimonialised. This will typically require a range of evidence, from bank statements to meeting minutes or correspondence between the parties. 

5. Emphasis on pre-nups and post-nups 

Pre-nups and post-nups set a clear intention on asset use and division, which the courts will take into consideration during any divorce settlements. Having these in place could cut out unnecessary litigation and encourage more efficient divorce proceedings. It’s important to work with a solicitor to draft these to ensure they are robust. Otherwise, there is a risk that the court will disregard them.

The Supreme Court’s decision in Standish v Standish provides much-needed clarity and refinement to the law of financial remedies. While it limits the scope of the sharing principle, it also reinforces fairness by respecting the source and treatment of assets.  

Whether you’re navigating a divorce, advising clients, or simply interested in family law, this judgment will shape the landscape for years to come.