Over 20 years ago, the Court’s decision in the case of White v White made clear that, generally, matrimonial assets should be divided equally between parties unless there is a good reason not to. However, during a divorce, parties can claim their assets are “non-matrimonial” and, therefore, shouldn’t be divided.
What is a matrimonial asset?
A matrimonial asset is any asset that has been acquired or generated during the marriage by the common endeavour of the couple (irrespective of roles) and should be shared by both parties on divorce. These include the family home, any additional properties, pensions, investments and savings acquired during the marriage.
What is a non-matrimonial asset?
In cases where there is more than enough money and other assets available to meet the needs of both parties, a situation can often arise whereby either one or both parties seek to argue that some of their assets are “non-matrimonial” and should not be shared and instead put to one side or ringfenced.
Non-matrimonial assets are those resources which were acquired prior to the marriage or after the parties separated.
Even where assets are deemed to be non-matrimonial, the existence and the value of those assets are not entirely ignored as they remain a resource from which the needs of the party with those assets can be met should that be necessary.
How are assets divided between matrimonial and non-matrimonial?
When analysing which assets are matrimonial and non-matrimonial, there can also be some assets and resources which are regarded as having become “matrimonialised”. This occurs when, for example, an asset that was non-matrimonial, e.g., owned solely by one party before the marriage, becomes matrimonialised during the marriage because of the parties’ dealings with that asset. If an asset is matrimonialised, then it will be treated as an asset that is to be shared on divorce.
An example of this is where one spouse inherits a sum of money prior to the marriage and uses inherited funds towards the purchase of the family home.
Matrimonial Assets in the case of Standish v Standish
In a case decided by the Court of Appeal earlier this year (Standish v Standish) the question of whether some assets which the husband had acquired before the marriage had become matrimonialised had to be considered.
At the time of the divorce, Mr and Mrs Standish had been together for around 20 years and had two children. Prior to meeting his wife, Mr Standish had built up substantial wealth from a successful career, which he left a couple of years after the parties married. Throughout the relationship, Mrs Standish was the homemaker and had modest pre-marital assets.
During the marriage, Mr Standish transferred the ownership of some assets he’d acquired prior to the relationship to his wife. This was done as part of a tax planning exercise whereby Mrs Standish was to settle those assets into a trust for the benefit of the two children of the marriage, and it was hoped that this would protect the family from some inheritance tax liabilities in the event of the husband’s death.
At the time when the marriage broke down that plan had not been implemented as the assets had not been settled into the trust and remained in the sole ownership of Mrs Standish.
Within the ensuing financial proceedings, Mrs Standish argued that the assets which had been transferred to her by her husband had been matrimonialised as a result of that transfer and should be shared equally along with other assets which both parties agreed were matrimonial.
Mr Standish was of the view that the assets transferred to his wife as part of the tax planning exercise had not been matrimonialised and therefore should not be shared equally.
The Court of Appeal decided that the assets which had been transferred to Mrs Standish had not been matrimonialised merely by the transfer of ownership. The source of those assets was relevant as to whether they should be shared.
Ultimately the Court of Appeal decided that the assets transferred to Mrs Standish were a hybrid containing both matrimonial and non-matrimonial property and a fair allowance had to be made for the non-marital element of those assets which had been generated by Mr Standish prior to the marriage.
The court went on to determine that only 25% of the assets which had been transferred were attributable to endeavour during the relationship and were subject to being shared equally between Mr and Mrs Standish.
Whilst this case involved significant sums of money and substantial assets, meaning that both parties left the relationship as multi-millionaires, it is a reminder that not all assets are considered matrimonial. Assets acquired before marriage or through inheritance may not be shared equally on divorce.
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