In a landmark decision with far-reaching implications for the financial treatment of divorce in England and Wales, the Supreme Court has clarified the legal approach to non-matrimonial property.
The judgment, delivered on 2 July 2025 in the high-profile case of Standish v Standish, confirms that non-matrimonial assets – typically those acquired before marriage or inherited – should not be subject to equal division unless they have been integrated into the marital partnership.
The ruling follows the dismissal of an appeal by Mrs Standish, who challenged the reduction of her divorce settlement from £45 million to £25 million. At the centre of the dispute was a £77 million transfer made by Mr Standish to his wife in 2017. Now valued at £80 million, the assets originated from Mr Standish’s pre-marital wealth.
Mrs Standish argued that the funds should be equally divided, as they had been legally transferred into her sole name. However, the transfer had been made on the advice of Mr Standish’s accountant, who recommended it to take advantage of Mrs Standish’s non-domicile tax status for inheritance tax (IHT) purposes. The intention was for the funds to be placed into an offshore trust – a step that was never taken. That advice ultimately triggered one of the few divorce cases to reach the Supreme Court since 2020.
A key element of Mrs Standish’s argument was that the transfer itself had transformed the assets from non-matrimonial to matrimonial property, through a process colloquially known as “mingling” or, more formally, “matrimonialisation.”
Mingling and Matrimonialisation
Before Standish, there was ongoing debate about what constitutes matrimonialisation. Some argued that simply transferring non-matrimonial property into a spouse’s sole name or into joint names was sufficient to strip it of its non-matrimonial status. Others advocated for a more nuanced, qualitative assessment.
Examples of everyday actions that could inadvertently trigger a matrimonialisation debate during divorce include:
- Using an inheritance to pay off a mortgage on the family home.
- Transferring non-matrimonial funds into a joint bank account.
- Using a solely owned overseas property as a family holiday home.
- Issuing company shares to a spouse or appointing them as a director.
While such actions may seem reasonable during a happy marriage, they can have significant consequences if the relationship ends.
Had Mrs Standish succeeded in her appeal, the transfer would have been deemed to matrimonialise the fund, potentially entitling each spouse to £40 million. Instead, the Court found that the fund retained its non-matrimonial character. This conclusion was based on:
- The fund’s origin in Mr Standish’s pre-marital wealth.
- The transfer being made solely on professional tax advice.
- A lack of evidence that the fund was ever intended or treated as a joint asset.
The Court ruled that the principal investment – comprising 75% of the £80 million fund – should remain with Mr Standish. The remaining 25%, representing growth during the marriage, was to be divided equally. As a result, Mr Standish retained £70 million, while Mrs Standish received £10 million from the fund.
Implications
The Standish ruling confirms that a qualitative assessment – rather than mere legal ownership – is essential in determining whether a non-matrimonial asset has been matrimonialised and is therefore subject to sharing. The Court reaffirmed that fairness, not formality, underpins the sharing principle:
“Title alone is insufficient. What is required is a demonstrable intention to share and consistent treatment of the asset as jointly owned.”
While the ruling provides greater clarity, future divorce cases will likely hinge on the qualitative evaluation of how assets were treated during the marriage. Historical records of discussions, agreements, and practical use of the assets will be critical in such assessments.
Pre and postnuptial agreements
The Standish case arguably arose through a combination of erroneously implemented advice and divorce. Mr Standish’s transfer of funds to Mrs Standish was always going to be heavily exposed as a potential issue on divorce without any postnuptial agreement clarifying how it might be treated were the couple to ever go their separate ways.
These types of transfer for IHT purposes, previously commonplace with high net worth couples, are growing in frequency as a result of the Governments budget changes last Autumn. More families are now looking to mitigate their IHT exposure by gifting assets to adult children. Applying the Standish logic, if those assets are used in the matrimonial sense by the recipient son or daughter, there is a risk that if there is a divorce, it will be argued that they should be shared.
Pre and postnuptial agreements carry huge persuasive weight and can be applied, not only to protect these assets from claims on divorce, but also promote discussion and financial clarity for all concerned.
Next Steps
Although the Supreme Court has now resolved the issue of the £77 million transfer, Mrs Standish is pursuing a separate claim in the High Court, arguing that the £25 million settlement is insufficient to meet her financial needs.
This decision is expected to have significant consequences not only for high-net-worth individuals and their advisors, but for anyone with pre-marital wealth or inheritance concerned about how such assets may be treated in the event of divorce.