Pre-marital wealth on divorce: What does Standish mean for our clients?

On 2 July 2025 the Supreme Court handed down its long-awaited judgment in the case of Standish v Standish. Practitioners have been particularly interested to see if, and how, the Court would develop the judicially created principles of ‘needs’, ‘compensation’, and ‘sharing’ which apply to the division of finances on divorce. In particular, what would the Court say in relation to ‘the sharing principle’: should all assets be shared, or only those generated by the parties’ common endeavour during their marriage?

The facts of this case concern a marriage and divorce, but the principles apply equally to the dissolution of a civil partnership.

So, what does Standish mean for our clients?

A reminder of how courts should exercise their powers to make financial orders on divorce, and the principles of ‘needs’, ‘compensation’ and ‘sharing’

Section 25 of the Matrimonial Causes Act 1973 confers a wide discretion on the court, under which it must have regard to ‘all the circumstances of the case’. Within this, the first consideration must be to the welfare of any minor children of the family and, in relation to a party to the marriage, particular regard must be had to certain specified matters.

On top of these statutory powers, the court has, through subsequent decisions made in the High Court, the Court of Appeal and the Supreme Court, added some ‘gloss’. That case law has clarified that the overall aim in making a financial order is to achieve a fair outcome and they have set out some principles on how that fairness may be achieved. The Supreme Court in Standish summarised them as follows:

‘… it has been made clear in the leading cases that, where possible and fair to do so, the court should ensure that the parties’ needs are met. This can be referred to as the ‘needs principle’. There should also be compensation to a spouse who has given up valuable opportunities by marrying. This can be referred to as the ‘compensation principle’. The third principle, which can be referred to as the ‘sharing principle’, is that the matrimonial assets should be shared, usually but not invariably, on an equal basis.’

Meeting needs takes priority, and only after that happens can the concepts of ‘compensation’ and ‘sharing’ be engaged. This means that the principles in Standish generally apply for clients with assets in excess of their needs.

Understanding the difference between matrimonial and non-matrimonial property

Legal title is not determinative. Generally, whether property is matrimonial or non-matrimonial depends on the source of that asset. As the Supreme Court stated, ‘Non-matrimonial property is typically pre-marital property brought into the marriage by one of the parties or property acquired by one of the parties by external inheritance or gift. In contrast, matrimonial property is property that comprises the fruits of the marriage partnership or reflects the marriage partnership or is the product of the parties’ common endeavour.’

Why is the difference important?

The Supreme Court has confirmed that, on divorce, matrimonial property can be subject to all three principles – sharing, needs and compensation. In respect of sharing, ‘Equal sharing is the appropriate and principled starting position’ (although arguments can be deployed to depart from that 50:50 starting point).

Non-matrimonial property can only be subject to needs and compensation. Not sharing. This is the ‘new bit’ – prior to this judgment, technically a sharing claim could be run against non-matrimonial property (although it was highly unusual and rarely successful).

So, on divorce, we now know that you can only share matrimonial property (i.e. the fruits of the marriage partnership).

Can non-matrimonial property become matrimonial property?

Yes. As the Supreme Court has confirmed, ‘what is important… 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.’ Assets can be ‘matrimonialised’ if the parties treat the asset as shared for a sufficiently long period of time such that the treatment of the asset as shared is regarded as settled.

Capital transfers for tax planning is ‘safe’

The assets subject to argument in the Standish case were pre-marital assets transferred by the husband to the wife in the context of a tax mitigation scheme. The intention and purpose of that transfer was to benefit the children of the family and not to share the assets with the wife. The wife argued that this transfer had ‘matrimonialised’ those assets.

The Court rejected the wife’s arguments and said, ‘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, do not normally show that the asset is being treated as shared between them. Rather the intention is simply to save tax. Tax planning schemes to save income tax, involving transfers of assets from one spouse to another, are commonplace given that there is no capital transfer tax on transfers between spouses. However, 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.’

Compensation lives on

While not relevant on the facts of Standish, it is striking to note that at every turn, compensation has been listed as one of the three relevant factors and not granted a lesser status to needs and sharing. While that technically reflects the status of judicial authority and the leading judgments in this area, in practice we know of many practitioners who do not believe compensation really ‘exists’. This is perhaps unsurprising as there have been very few reported cases where a compensation-based argument has succeeded and often the relationship-generated disadvantage has instead fed into the party’s inability to meet their own financial needs.

We felt it was conspicuous when watching the Supreme Court hearing that the Court felt compensation was alive and well. This is not a particular surprise to us, given that we have acted in a number of recent reported and unreported successful compensation cases to include RC v JC [2020] EWHC 466 (Fam). However, we suggest that the re-emphasis of compensation within this high-profile judgement could trigger a resurgence in compensation claims, particularly given that the Supreme Court has confirmed compensation claims can be made against non-matrimonial assets.