Landmark ruling in divorce case
The case of Standish vs Standish has finally clarified how the Court will deal with non-matrimonial property.
The Supreme Court has recently ruled in a long-running case concerning family finances, which may reshape how matrimonial and non-matrimonial assets are treated in divorce proceedings, particularly of high-net-worth couples. The case provides guidance on the question of whether assets should always be shared between the parties, especially if it was premarital wealth.
The case was between a very wealthy couple, Mr and Mrs Standish, who married in 2005 and separated in 2020. The husband had a successful career in the financial services industry, and in 2017, after receiving financial advice, he transferred substantial investment funds from his sole name into his wife’s sole name. He also issued the wife with shares in a farming business based in Australia. These transfers were recommended to the husband for tax planning purposes. There was an intention to put the investment funds into a trust for their children, but the wife did not take those steps, which meant that these funds were still held in the wife’s sole name upon separation.
The husband maintained that he had made a very large contribution to the marriage by way of premarital wealth and that the wife’s reasonable needs were already met, and the remainder of the assets should be held by him. However, the wife argued that the assets were matrimonial from the outset, and the transfer to her in 2017 made those assets hers. She argued that because they had been transferred into her sole name, they were then her non-matrimonial property.
The case has been heard in the High Court, the Court of Appeal, and most recently the Supreme Court. After two months of deliberation, the Supreme Court ruled in favour of the husband and dismissed the wife’s appeal, confirming that, despite the legal title of the assets passing to the wife, the funds remained his non-matrimonial assets.
This ruling may help to clarify the issue around when premarital assets become marital, or the ‘matrimonialisation’ of the assets. Following this ruling, we may see a shift in how lawyers will support families going through divorce. Family lawyers and financial advisors may need to work more closely together, and their clients who move money for tax or business reasons may have to document their reasons for doing this and who they have discussed it with. Consequently, there may be a rise in prenuptial and postnuptial agreements to help clarify your position and protect your assets. If Mr and Mrs Standish had had a pre-nuptial agreement, it could have clarified their intentions and prevented years of litigation on separation.
This case shows that intent is everything. The court’s decision emphasizes the importance of proactive planning for tax purposes and also brings clarity to your relationship and financial security. We suggest that you seek early advice from a family lawyer and a financial advisor. Plan early, ideally before or shortly after marriage, and keep records of your intentions if you are moving large sums of money or assets. Also, seek specialist legal advice regarding drafting agreements and protecting your wealth. For more information or to discuss pre- or postnuptial agreements, contact our family law team on 01492 874774.