When people get divorced they usually need to decide how their finances will be divided between them. People are free to decide themselves what is fair (within reason), but people often rely on legal principles to guide them (ultimately if people cannot decide, either of them has the option to make an application to Court, and these legal principles will be applied by the Court). The legal principles can be found in statute (section 25 of the Matrimonial Causes Act 1973) and in the decisions of the higher Courts. Which principles are applicable will depend on a couple’s particular circumstances.
One common question that people have is how does the law say assets should be divided if they have been accrued before the marriage, or if they have been received as a gift or inheritance during the marriage. In July 2025, the Supreme Court (the highest Court in the UK) made a decision for Mrs and Mr Standish that answered just these questions, and beautifully summarised/clarified the law:
- When the Court makes a decision as to how finances should be divided during divorce there is a distinction between ‘matrimonial’ and ‘non-matrimonial’ assets. Whether an asset is matrimonial or non-matrimonial depends on the source of the asset. Non-matrimonial assets have usually been accrued before the marriage and are brought into the marriage by one person, or the asset is acquired by one person by external inheritance or gift. Matrimonial assets on the other hand are assets that are built up during the marriage, they are fruits of the marriage or reflect the marriage partnership or are the produce of the parties’ common endeavour. The name in which assets are held is not determinative as to whether they are matrimonial or non-matrimonial.
- Non-matrimonial assets should not be subject to the sharing principle. The sharing principle is quite simply that, the sharing of assets between the couple, usually but not invariably on an equal basis. However, it might be appropriate to share non-matrimonial assets if the other person needs a share of them to meet their needs, or, more rarely, if it would be fair to provide some compensation because the other person gave up valuable opportunities by marrying.
- Matrimonial assets should be subject to the sharing principle. This should usually be on an equal basis and sharing equally will be the starting point. However there can be justified departures from equal sharing.
- What starts as a non-matrimonial asset can become a matrimonial asset. This is sometimes called ‘matrimonialisation’. Whether a non-matrimonial asset has become matrimonial will depend on the particular circumstances. What is important to consider is 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 will look at intention as part of this.
- If one person transfers a non-matrimonial asset from their sole name to the name of the other person for tax purposes, irrespective of the time period involved, this would not normally show that the asset is being treated as shared between them. Rather than the intention to share the asset, the intention is simply to save tax.
In addition to clarifying these important points, the Judgment provides a wider summary of the law that is applicable to the division of finances during divorce, and is well worth a read.
Standish v Standish [2025] UKSC 26
Carrie Rudge, Consultant Solicitor.