What does this mean?
When a couple gets divorced, the Court and the couple must consider how the financial assets are going to be divided. When considering this, the Court must determine whether these assets are matrimonial or non-matrimonial.
A matrimonial asset is an asset that has been ‘built up’ or acquired during a marriage. These assets usually include the family home, savings and pensions.
A non-matrimonial asset is an asset that has been brought into the marriage by one spouse. For example, this could be a property purchased prior to the marriage by one person or inheritance.
Why is this so important?
The importance of this is related to how these assets are viewed. If a spouse has non-matrimonial assets, there is an argument that these should be ‘ring-fenced’ and the other spouse should not therefore have a claim on this asset.
With this being said, non-matrimonial assets are capable of becoming a matrimonial asset. To determine whether an asset has been ‘matrimonialised’ we must look at how this asset has been dealt with during the duration of the marriage. A prime example of an asset becoming matrimonialised is where one party may use their savings that they accumulated prior to the relationship, in order to purchase a family home.
It is incredibly important to clarify what assets are matrimonial and non-matrimonial when determining how the assets of the marriage should be divided. Matrimonial assets will be subject to the ‘sharing principle’ whereby the assets could be divided equally, whereas non-matrimonial assets can potentially be ring-fenced and not shared with the other spouse.
It is important to note that the sharing principle is a starting point and not guaranteed. The entire facts of the case must be considered when determining how matrimonial and non-matrimonial assets are to be divided. The parties’ needs must be met as a priority, therefore whilst there may be non-matrimonial assets available, if they are required to meet the other spouse’s needs, then they can be divided accordingly.
Standish – v – Standish
Whilst there has been case law on the matrimonialisation of assets in the past, the current case of Standish – v- Standish has caused quite the commotion in the Family Courts in 2024.
This case involved assets of around £132 million, of which Mr Standish argued that he had brought significant wealth into the marriage from his successful career in financial services. The main point of dispute in this case related to £77 million worth of assets which were transferred to Mrs Standish for tax planning purposes in 2017, a common occurrence between spouses. Mr Standish’s position was that this sum of money was non-matrimonial as it was funds that he had obtained from his career before they had met.
Mrs Standish’s stance was that the sum of £77 million had become matrimonialised by virtue of the funds being transferred into her sole name. It was her position that this had led to these assets becoming matrimonial property capable of being shared. Mrs Standish’s position was that £112 million out of the total £132 million was therefore subject to the sharing principle and capable of being divided equally between the parties.
The Judge first dealing with the case agreed with Mrs Standish, however, using his discretion determined that the £77 million should not be shared equally but 60/40 in Mr Standish’s favour. Mrs Standish was therefore awarded 40% of the £77 million.
Neither Mr or Mrs Standish were happy with this, and both appealed the Final Order.
The Court of Appeal
The Court of Appeal allowed the appeal to proceed. It was the Court of Appeal’s view that the matrimonialisation of assets should have been applied more narrowly than it was.
The Court of Appeal emphasised that when determining whether an asset has been matrimonialised the source of the asset must be looked at and not just whose name it is. The fact the funds had been transferred to Mrs Standish did not take away the source of those funds and how they had been brought into the marriage.
The Court of Appeal found that 40% was not fair in all the circumstances and should not have been awarded to Mrs Standish, highlighting that there should have been an assessment as to how many of the transferred funds were built up during the marriage. Once that was determined, the sharing principle could then be applied to those assets only.
Mrs Standish award of £45 million at first instance was drastically reduced to £25 million.
Mrs Standish has successfully obtained permission to appeal this Judgment. Practitioners are eagerly awaiting the decision.
What does the future hold?
At this moment in time, it is clear that we must carefully consider the source of an asset when determining whether an asset is matrimonial. It is not enough to just refer to the ownership of that asset.
The law in this area is therefore unclear at this moment in time although, no doubt the outcome of this recent appeal will give clarity.
How can I protect my pre-marital wealth?
If you are bringing significant pre-marital wealth into your marriage, a pre-nuptial agreement is an effective way to ringfence this in the event of a divorce. Pre-nuptial agreements are practical and may provide a way to protect your pre-marital assets. These agreements will be under constant review during your marriage to provide the best chance of them being upheld in the event of a divorce.
If you are already married, a post-nuptial agreement can also be considered to protect pre-marital wealth. It is imperative that you seek legal advice in this regard if you wish to protect your pre-marital wealth.
We at BTMK are experienced in dealing with pre-nuptial agreements and arguments regarding the matrimonialisation of assets.
