It is firstly important to understand what the law understands property and finances within a marriage to be: are they owned jointly, even if they are in one partner’s sole name? How is this agreed upon at the point of divorce?
When it comes to divorce and separation, finances are often an area of tension. Where either or both parties have amassed wealth and assets before the marriage, this can be all the more complex. It is not unusual in such cases for there to be questions over whether the assets should be considered as part of the ‘marital pot’ or whether they are sole owned.
The law deems that ‘matrimonial assets’ are property, finances and other assets that have been built up during the marriage as a result of joint effort from both parties. This is usually the family home, joint bank accounts, even the car/cars. These make up the matrimonial pot, to be split according to the sharing principle on divorce. The sharing principle is used in financial cases where divorcing couples get, as a starting point, an equal division of the matrimonial assets. The reality of this is more complex and will depend on the needs of each person, as well as a multitude of other factors.
Non-matrimonial assets are more of a grey area, but generally it is considered any asset that was brought into the marriage by one party, or sometimes those that were gained after separation.
A prime example of where the waters can be muddied is in the case of Standish vs Standish, a case recently heard at the Supreme Court.
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Standish vs Standish is a financial remedy case going through the courts. Mr and Mrs Standish married in 2005, after a brief period of cohabiting. They spent time in Switzerland and Australia, before settling in England in 2010.
The couple had significant wealth. However, the majority was generated by Mr Standish before the relationship with his wife began, and the majority was held in his sole name. He had a successful career in the financial services industry, and Mrs Standish remained at home and took on childcare responsibilities throughout the marriage. In 2017, Mr Standish transferred £77.8m of his pre-marital wealth to his wife as part of a tax planning scheme, on the condition that this money would be held in a trust.
However, Mrs Standish retained the money in her name and filed for divorce in 2020. Initially, the judge presiding over the ex-couple’s case decided that the funds were matrimonial property and awarded Mrs Standish £45m.
Nuptial agreements and the Standish case
At a cross-appeal, the Court of Appeal held that the transferred funds were not matrimonial property, and that 75% of the 2017 assets the couple had were solely Mr Standish’s property. Mrs Standish was then at the receiving end of the largest reduction of a divorce award in English and Welsh court history by 40% to £25m.
Mrs Standish appealed to the Supreme Court, and evidence was heard from both sides. As yet, the Supreme Court has not made a judgment. However, family lawyers are awaiting the outcome eagerly, as it may set a precedent for the treatment of non-matrimonial assets in divorce, as well as opening the floodgates to nuptial agreements.
The Standish appeal has brought to the forefront the importance of understanding and protecting personal wealth in marriage, and to make the process of divorce, should this occur, smoother.
Marriage does interlink a couple’s finances. However, if separation and divorce occur down the line, it is not simply a case of splitting equally down the middle. Pre-marital wealth can be a cause of disputes, particularly if the asset has been utilised by the family; for example, a home in a sole name that has been used as a family residence, or where finances have been transferred into the other spouse’s name, as in Standish.
A nuptial agreement can go some way in protecting pre-acquired wealth. A prenuptial agreement is a document signed before the wedding detailing all the assets owned by both parties, and what should happen to it if the relationship breaks down. These are living documents, and should be updated regularly, particularly if there is a significant change like inheritance or the birth of a child. A post-nuptial agreement is to all intents and purposes the same but can be drawn up after the wedding.
Nuptial agreements are not legally binding, but if prepared correctly by a family lawyer, can hold weight in the case of dispute. It will be interesting to see, in the wake of the Standish appeal, and when a judgment is made, whether nuptial agreements will be popularised and calls for them to be made legally binding increase.
Siobhan Vegh is a partner at Stowe Family Law
