The Supreme Court delivered their judgment on Wednesday 2nd July in the landmark case of Standish v Standish. This article will take you through what this means for family practitioners and the future of financial remedy proceedings.
Background
In 2017, Mr Standish transferred £80 million of non-matrimonial assets to Mrs Standish with a view to these assets being placed into a trust. The purpose of the transfer was to minimise the family’s exposure to inheritance tax for the benefit of the children.
However, this trust was never created and therefore the assets remained in Mrs Standish’s sole name.
High Court
On divorce, Mr Standish argued that the assets he transferred were ‘non-matrimonial’ as they were acquired by him prior to marriage and therefore were not open to the sharing principle. However, Mrs Standish argued that all assets should be considered family wealth and up for division.
The Judge at the High Court, Mr Justice Moor, ordered the assets be divided 60/40 in Mr Standish’s favour and all assets were included in the pot. Both parties appealed the decision to the Court of Appeal
Court of Appeal
At the Court of Appeal, the judges took a different view and noted that the source of assets cannot be ignored and therefore where the asset comes from is an important consideration.
In light of this, the Court of Appeal ordered:
75% of the assets were ‘non-matrimonial’ and therefore should be retained by Mr Standish. The remaining 25% was viewed as matrimonial and open to the sharing principle.
Mrs Standish appealed.
The Supreme Court
The Supreme Court have now delivered their judgment and have dismissed Mrs Standish’s appeal upholding the decision of the Court of Appeal.
The Supreme Court held that as the intention of the transfer was for to minimise the exposure to inheritance tax for the benefit of the children and not for the wife, this demonstrated a lack of matrimonlisation as the assets were not treated as shared.
What are non-matrimonial assets?
Non-matrimonial assets are those assets which are not considered part of the matrimonial pot and therefore not subject to the sharing principle. An example of such assets include pre-marital assets, so assets that have been received or accumulated prior to marriage or cohabitation. Another example are those assets which have come from a third party such as inheritance. An individual who is in receipt of a non-matrimonial asset may be advised that such assets should be held by them solely and not mingled with the matrimonial pot otherwise the assets would be automatically open for division. However, following this decision from the Supreme Court it is no longer so clear.
What this means moving forward
What is clear from the Supreme Court decision is that real consideration should be given to the treatment of assets during the marriage and who was the intended beneficiary even after the mingling and transferring of non-matrimonial assets. It shows that such mingling is not always a clear indication as to how the asset is to be treated by the Family Court.
Ultimately, if a non-matrimonial asset has been mingled or transferred but has not been treated as shared then it may not be included in the matrimonial pot for sharing.
If you would like more information about matrimonial vs non-matrimonial assets or divorce advice generally, please contact Isabel Kerr at i.kerr@consilialegal.co.uk or call 0113 322 9222.