STANDISH v STANDISH [2025] UKSC 26: SHARING AND MATRIMONIALISATION


22nd Jul 2025

Daniele Scanio provides commentary on the Supreme Court Judgment in Standish v Standish and the question of “When does non-matrimonial property become matrimonial property in the context of financial remedy proceedings, and how should the sharing principle be applied to such property?”

Standish v Standish [2025] UKSC 26: sharing and matrimonialisation

It has taken almost 20 years since the last financial remedies case was heard at the highest court of the land. The Supreme Court provided a succinct synopsis of this area of law generally. However, the case focuses principally on the sharing principle; whether non-matrimonial assets can be subject to the sharing principle and when, if ever, non-matrimonial assets can be “matrimonialised” under the sharing principle.

Summary of the law of financial remedies

The Supreme Court commenced the judgment with a brief summary of the law of financial remedies. In any financial remedies proceeding, the overall aim in making a financial order is to achieve a fair outcome. The courts will not discriminate in favour of the spouse who has been the principal wage-earner at the expense of the spouse who has principally been the home-maker and (where relevant) child-carer. This can be referred to as the “non-discrimination principle”.

The courts have over the years developed principles to synthesise and provide guidance on how to achieve a fair result.

First, at a high level of generality, where possible and fair to do so, the court should ensure that the parties’ needs are met. These needs must be relationship-generated needs which it is right that the other party should meet. This can be referred to as the “needs principle”.

Secondly, there should be compensation to a spouse who has given up valuable opportunities by marrying. This can be referred to as the “compensation principle”.

Thirdly, and pertinent to this case, is the “sharing principle”, which stipulates that the assets accrued during the marriage as a result of the parties’ joint endeavours (taking into account the non-discrimination principle) should be shared, usually but not invariably, on an equal basis, unless there is good reason not to.

There is a distinction between assets which each spouse owned in his or her own right prior to the marriage or by inheritance or gift from an external source during the marriage, which have been termed “non-matrimonial property”, and, on the other hand, assets that are earned or gained during the course of, and as a result of, the marriage, which have been termed “matrimonial property”. Matrimonial property is subject to the sharing principle with the starting point being equal sharing.

Facts

The husband had a very successful career in the financial services industry rising to the top of UBS, the multinational investment bank. The husband and wife were married on 19 December 2005. An important financial event took place in 2017, 12 years after the parties married and three years before their marriage ended, which is at the centre of this appeal. The husband transferred from his sole name into the wife’s sole name assets consisting of investment funds worth over £80 million (“2017 Assets”). These assets were mostly the husband’s pre-marital wealth and, therefore, non-matrimonial property. The reason for the transfer was, upon tax-planning advice, so the husband can avoid paying inheritance tax. The wife was non-UK domiciled due to her domicile of origin being Australia. The husband was advised that, provided he transferred his assets to the wife before he was deemed domiciled in the UK, the assets would escape UK inheritance tax.

It was accepted by the wife that the 2017 Assets were transferred by the husband to negate a potential future tax liability, namely inheritance tax on the husband’s estate if he died while domiciled in the UK. Once a suitable period of time had elapsed, it was intended that the wife would place the assets in discretionary trusts in Jersey for the benefit of the parties’ two children, X and Y, who were both around the age of 18 at the time of the Supreme Court hearing. The wife never, in fact, created the trusts and she continued to hold the 2017 Assets in her sole name.

Issue

How does the sharing principle apply where, a relatively short time before the divorce, the husband made a transfer of approximately £80 million of non-matrimonial assets to the wife for the purpose of setting up trusts to negate inheritance tax and where, at the date of the divorce, the wife had not set up the trusts and retained the assets?

Supreme Court decision

The Supreme Court applied the following legal principles to the application of the sharing principle:

First, there is a conceptual distinction between matrimonial and non-matrimonial property, which turns on the source of the assets, not the title. To base an award on title would run counter to the discrimination and sharing principles.

Secondly, non-matrimonial property should not be subject to the sharing principle (though non-matrimonial property can be subject to the principles of needs and compensation). The distinction between matrimonial and non-matrimonial property becomes largely meaningless if the sharing principle applies to the latter as well as the former.

Thirdly, sharing of the matrimonial property should normally be on an equal basis. Although there can be justified departures from that, equal sharing is the appropriate and principled starting position.

Fourthly, what starts as non-matrimonial property may become matrimonial property (referred to as “matrimonialisation”). The important question on any facts is whether that transformation has occurred and how to identify this. This concept of matrimonialisation should not be viewed as either narrow or wide. What is important (leaving aside matrimonial property resting on contributions from each party) is to consider how the parties have been dealing with the asset and whether this shows that, over time, they have been treating the asset as shared between them. Thus, matrimonialisation depends on the parties, over time, treating the asset as shared. Therefore, it is the parties’ treatment of what was initially non-matrimonial property, over time, being shared between them, that is central in deciding the fairness of that property being viewed as matrimonialised.

The fifth and final principle relates directly to matrimonialisation in the context of the facts of this case. In relation to a scheme designed to save tax, under which one spouse transfers an asset to the other spouse, the parties’ dealings with the asset, irrespective of the time period involved, will not normally show that the asset was treated as shared between them. Rather the intention is simply to save tax. Transfers of capital assets with the intention of saving tax, do not, without some further compelling evidence, establish that the parties are treating the capital asset as shared between them.

Applying the principles set above, the court held that the source of the pre-marital assets within the 2017 Assets should be regarded as belonging to the husband’s non-matrimonial property (notwithstanding they were in the wife’s name). The transfer was in pursuance of a scheme to negate inheritance tax, and it was for the benefit exclusively of the children. The 2017 Assets were not being treated by the husband and wife for any period of time as assets that were shared between them. The court dismissed the wife’s appeal.

Commentary

This is the first case, since White and Miller/Macfarlane, in which the highest court of the land has considered the distinction between matrimonial and non-matrimonial property in the context of applying the sharing principle. For any financial remedies’ practitioner, this is essential reading.

The judgment clarifies (contrary to earlier appellate authority e.g. Charman) that the sharing principle only applies to matrimonial property and does not apply to non-matrimonial property. Another key element of elucidation is how we should apply the concept of matrimonialisation. The task of the court is to assess how the parties have been dealing with the asset and whether this shows that, over time, they have been treating the asset as shared between them.

The court stated the concept should not be narrowly nor widely applied. If the concept is applied narrowly, it may unfairly exclude certain assets that have been treated as a shared asset between the parties. At the other end of the spectrum, the danger of a widely applied concept is that it would open the floodgates to litigants seeking to advance spurious arguments that an asset had been matrimonialised, thereby impeding settlement and causing an avalanche of contested cases which would have the consequence of (a) creating further strain on the already overstretched court system and (b) the wasteful expenditure of the parties’ financial resources on litigation costs.

The emphasis is always on assessing all the circumstances of the case (as highlighted in section 25(1) Matrimonial Causes Act 1973) and adjudicate from a neutral position, with no presumption one way or the other regarding the matrimonialisation of an asset. It is the court’s obligation to have regard to all the factors, and consider how the parties have been dealing with the asset and whether this shows that, over time, they have been treating the asset as shared between them.

The court stated that “over time”, means a period of time that is sufficiently long for the parties’ treatment of the asset as shared to be regarded as settled. The court allowed for judicial discretion to adjudicate on what would be fair. The court did not limit the law to an arbitrary number of years; but allowed for flexibility and interpretation, subject to other relevant factors in the assessment of the case.

Specifically to the facts of Standish, the court held that a transfer of capital assets with the intention of saving tax, does not, without some further compelling reason, establish that an asset is subject to the sharing principle. It should be noted that the court did not state that this application of matrimonialisation, concerning the transfer of assets with the intention of saving tax, is to be applied invariably, but rather, provided guidance for the courts to apply, and identify whether an asset is to be shared. There is no doubt a budding lawyer will find reasons to establish why assets transferred with the intention of saving tax may mean the assets should be shared. Nonetheless, the current guidance is that assets transferred for tax-saving reasons will not normally be shared. Under this reasoning, it appears that the assessment of how the parties treat an asset includes the parties’ intentions and is not confined to merely the transfer of the asset itself.

The judgment is a testament to the excellence of the common law, striking the balance between desired predictability of outcome, whilst allowing for judicial discretion for each set of facts to ensure fairness can be achieved.

Whilst the judgment is welcomed, there are still some questions that remain. For example, what would be the outcome if a pre-marital holiday home was bought by the husband but left uninhabited, and during the long marriage he would tell his wife that he wanted to renovate it for the parties to enjoy together, or rent out, but he never got round to it due to the parties making too much money on their respective businesses? Upon divorce, would the asset be shared? The intentions were to share it, but there was never any actual dealing with the asset between the parties. Perhaps in this scenario, when analysing how the asset was dealt with between the parties, the wife would need to show evidence of more than just a conversation of the intention to share the asset, but also evidence of the asset actually intending to be renovated.  

Moreover, some may criticise the Supreme Court judgment in that it imposes one rule for the taxman and another rule for the parties. To HMRC the parties are saying the assets belong to the wife, but to the family court the husband is saying the assets belong to him (for the benefit of the parties’ children). However, it is generally accepted, and advised by tax specialists, that there are legitimate tax mitigation advantages to be taken, that may or may not align with a desired intention. What matters to HMRC is that the correct procedure is followed. How the family choose to structure their finances for tax purposes may be different to their familial intentions. 

The purpose of the family court is to achieve a fair division of the assets, and fairness involves an assessment of how an asset has been treated between the parties. The parties have the obligation of full and frank disclosure, and the courts must decide upon the division of assets subject to the principles developed by applying the statutory framework of the Matrimonial Causes Act 1973. One thing is for certain about the judgment, and the concept of matrimonialisation generally; whether an asset is considered to be matrimonial is dependent on all the circumstances of the case. The specific court-developed principles underpinning the law of financial remedies upon divorce serve only to ensure fairness can be achieved.

The sharing principle only applies to matrimonial assets, but in order to decide whether an asset becomes matrimonial, the courts will need to assess how parties treated that asset. Generally speaking, pre-marital assets transferred for tax-saving schemes will not be matrimonialised without further evidence to prove the asset was intended to be shared. Where we look next is how the judgment will be applied.


Daniele Scanio is a current Family Finance Law pupil at 18 St John Street Chambers, under the supervision of Stephen Murray. For more information on Daniele and the members of the Family Department at 18 St John Street, please contact Senior Clerk Camille Scott or a member of the clerking team on 0161 278 8263 or email family@18sjs.com.