When a marriage or civil partnership ends, one of the most complex and emotionally charged issues is how to divide the couple's finances. In England and Wales, the law gives judges wide discretion to decide what is fair—but what does that actually mean in practice? And how has the recent Supreme Court decision in Standish v Standish changed the landscape?
This article explains the legal framework judges use to decide financial settlements on divorce, and explores how the Standish ruling has clarified the treatment of non-matrimonial assets—potentially affecting thousands of divorcing couples across the UK.
The Legal Framework: Section 25 of the Matrimonial Causes Act 1973
The starting point for any financial settlement in divorce is Section 25 of the Matrimonial Causes Act 1973. This section sets out the factors a judge must consider when deciding how to divide assets. These include:
- The welfare of any children under 18 (which is the first consideration)
- The income, earning capacity, property and other financial resources of each party
- The financial needs, obligations and responsibilities of each party
- The standard of living enjoyed during the marriage
- The age of each party and the duration of the marriage
- Any physical or mental disability
- The contributions each party has made or is likely to make in the future
- The conduct of either party (but only in the most exceptional cases)
- The value of any benefits lost due to the divorce (e.g. pensions)
This list is not ranked in order of importance, and judges must consider "all the circumstances of the case". This gives the courts a great deal of flexibility—but also means outcomes can be unpredictable.
The Three Key Principles: Needs, Sharing, and Compensation
Over the years, the courts have developed three guiding principles to help interpret Section 25:
- Needs
This is the most common basis for awards. The court ensures that both parties (and any children) have enough to meet their reasonable housing and income needs. This is especially important in cases where there isn't enough money to go around. - Sharing
Where there is surplus wealth beyond needs, the court may apply the sharing principle—the idea that assets built up during the marriage should be divided equally. This reflects the partnership nature of marriage. The starting point is therefore usually an equal division of the matrimonial assets and then the factors in section 25 above applied. - Compensation
This principle applies in more unusual cases, where one spouse has given up a lucrative career or opportunity for the sake of the marriage or family. The court may award extra to compensate for that lost earning potential.
Matrimonial vs. Non-Matrimonial Assets
A key issue in many high-net-worth divorces is whether certain assets should be shared at all. The courts distinguish between:
- Matrimonial assets: Property acquired during the marriage through joint effort (e.g. the family home, joint savings, crypto, shares in businesses and companies, pensions). These are usually shared equally. Assets can still be matrimonial even if they are in one person's name.
- Non-matrimonial assets: Property owned before the marriage, inherited, or gifted to one spouse. These may be excluded from sharing—unless they have become "matrimonialised".
But what does "matrimonialised" mean? That's where Standish v Standish comes in.
The Facts of Standish v Standish
In Standish v Standish [2025] UKSC 26, the Supreme Court was asked to decide whether a large sum of money transferred by a husband to his wife during their marriage had become a matrimonial asset.
- The couple had been married for over 20 years.
- During the marriage, Mr Standish transferred £77.8 million to Mrs Standish.
- He claimed this was for tax planning and was meant to be placed in a trust for their children—not a gift.
- Mrs Standish argued the money had become part of their joint marital assets and should be shared equally.
At first instance, the High Court agreed with Mrs Standish and awarded her £45 million. The Court of Appeal disagreed, reducing her award to £25 million, finding the money remained non-matrimonial. Mrs Standish appealed to the Supreme Court.
The Supreme Court's Ruling
The Supreme Court unanimously upheld the Court of Appeal's decision. It ruled that the funds remained non-matrimonial and were not subject to the sharing principle.
The judgment clarified five key points:
- Clear Distinction Between Matrimonial and Non-Matrimonial
Assets
The Court reaffirmed that only assets acquired through joint effort during the marriage are matrimonial. Pre-marital wealth, gifts, and inheritances are generally non-matrimonial.
- Sharing Principle Applies Only to Matrimonial Assets
The Court confirmed that non-matrimonial assets are not subject to equal division, unless they have been clearly and fully integrated into the marriage.
- Equal Division Is a Starting Point—Not a Rule
For matrimonial assets, equal division remains the default starting point. But this can be adjusted based on needs or other factors.
- 'Matrimonialisation' Requires Clear Evidence
To convert a non-matrimonial asset into a matrimonial one, there must be clear evidence of integration—such as using the asset to buy a family home or placing it in joint names.
- Intention Matters
The Court placed weight on the intention behind the transfer. Since Mr Standish had not intended the money to be a gift, and it was never used jointly, it remained his separate property.
In cases other than very short marriages and no children, the housing and income needs of both partes is likely to dictate how assets are shared and if there is a string need, then even non-matrimonial assets can be shared.
Why Standish Matters
The Standish ruling is one of the most significant family law decisions in recent years. It provides much-needed clarity on how non-matrimonial assets are treated, especially in high-value cases.
Key Implications:
- Greater protection for inherited or pre-marital wealth: Wealthy individuals may now feel more confident that their personal assets will not be divided unless they are clearly shared.
- More emphasis on intention and conduct: The court will look closely at how assets were used and whether there was a clear intention to share them.
- Potentially smaller awards for spouses: In long marriages where one party brought in significant wealth, the other may now receive less unless they can show the assets became matrimonial.
What This Means for You
If you're going through a divorce—or thinking about one—Standish v Standish could affect your financial outcome, especially if:
- One of you brought significant wealth into the marriage
- There are large gifts or inheritances involved
- You're unsure whether certain assets are "joint" or "separate"
Here are some practical tips:
- Keep Records
If you receive a gift or inheritance, keep it separate and document its origin. Avoid mixing it with joint finances unless you intend to share it. - Consider a Prenup or Postnup
These agreements can help clarify what should happen to assets on divorce. While not automatically binding, courts increasingly give them weight—especially if both parties had legal advice. - Get Legal Advice Early
Family law is complex and fact-specific. A solicitor can help you understand what a person's strong points are and any weaknesses and then formulate the best argued position. A family mediator can help negotiate a fair settlement and save tens of thousands of pounds in legal fees taking a case through the court.
Conclusion
Dividing finances on divorce is rarely straightforward. Judges in England and Wales have wide discretion, guided by the principles of needs, sharing, and compensation. The recent Supreme Court decision in Standish v Standish has brought welcome clarity to the treatment of non-matrimonial assets, reinforcing the idea that only assets acquired through joint effort should be shared equally. In most cases
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
