The Supreme Court has ruled in favour of the husband in the case of Standish v Standish. It upholds the decision of the Court of Appeal that £77.8m of pre-marital funds transferred to the wife during the marriage for the purposes of tax planning were non-matrimonial and had not been ‘matrimonialised’ by virtue of the transfer.
The court highlighted a ‘conceptual distinction’ between non-matrimonial and matrimonial property. The time has now come to recognise that in divorce cases the sharing principle applies only to matrimonial property, unless, of course, consideration needs to be given to ‘needs’ and ‘compensation’.
In this case, the Supreme Court considered whether the transferred asset had been treated as shared. As the transfer was designed to save tax, the court did not find that the funds had been treated as shared and therefore had not been matrimonialised.
The conclusion was that the Court of Appeal’s decision that 25% of the assets in 2017 were matrimonial and 75% were non-matrimonial is correct and, therefore, only the matrimonial assets should be shared equally.
This decision crystallises the principle that only matrimonial assets should be available for sharing on divorce. It highlights that non-matrimonial funds should be treated as such, even in circumstances where they have been transferred to a spouse, provided that the asset was not treated as shared subsequently.
It is likely that following this judgment, couples entering into pre- and post-nuptial agreements will be advised to ensure that non-matrimonial property is concisely defined in the agreement. Further, terms should also be included to ensure that there is no ambiguity as to how non-matrimonial assets should be treated in the event of divorce if they are transferred to a spouse during the marriage.
