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Matrimonialisation of assets in financial settlements on divorce. The Standish case.

The recent Court of Appeal decision in Standish is a landmark ruling that has significant implications for financial settlements in divorce proceedings in England and Wales. The judgment provides clarity on several key issues regarding how assets should be divided, particularly those considered to be non-matrimonial.

Background of the Case

In the Standish case, the primary issue was the treatment of assets acquired by one party before the marriage and whether these should be included in the pool of matrimonial assets to be divided. The couple had been married for several years, during which time the husband’s pre-marital assets had substantially increased in value due to various factors, including his managerial efforts and broader market conditions.

Key Aspects of the Court of Appeal Decision

Non-Matrimonial Assets and Their Growth

One of the seminal points in the Court of Appeal’s decision was its approach to the growth of non-matrimonial assets during the marriage. The court held that:

– Intrinsic Growth vs. Active Contributions: If the increase in value of a non-matrimonial asset is due to passive factors, such as market conditions, the entire increase may not necessarily be considered matrimonial. However, if the growth is substantially due to the efforts of one spouse (i.e., active management or contributions), then the increase could be viewed as a matrimonial asset.

Fairness and Needs

Another critical aspect of the Standish decision is the emphasis on achieving fairness, particularly in long-duration marriages where distinguishing between matrimonial and non-matrimonial assets becomes more challenging. The court underscored that:

– Needs vs. Equal Sharing: While the principle of equal sharing is a starting point, the court must also consider the reasonable needs of both parties. This is particularly relevant when the division of non-matrimonial assets might be required to meet those needs.

– Lifestyle Considerations: The standard of living established during the marriage continues to be a significant factor. The court aims to ensure that both parties can maintain a lifestyle reasonably commensurate with what they enjoyed during the marriage, within the available resources.

So what are the Implications of the Decision

Emphasis on Asset Origin and Contributions

The Standish ruling reinforces the importance of distinguishing between the origins of assets (matrimonial vs. non-matrimonial) and the contributions made by each spouse during the marriage. This has several practical implications:

– Documentation: It becomes crucial for individuals to maintain clear records of assets brought into the marriage and any subsequent growth or contributions. Proper documentation can help substantiate claims regarding the origins and nature of assets.

– Expert Valuations: Financial experts may be increasingly called upon to provide valuations and assessments to distinguish between passive growth and active contribution to asset appreciation.

Flexibility in Settlements

The judgment also provides courts with greater flexibility to tailor settlements that reflect the individual circumstances of each case. This ensures that settlements can be fairer and more equitable, albeit potentially leading to more complex and nuanced negotiations and litigation.

Long Marriages

For long marriages, the ruling acknowledges the difficulty in separating out non-matrimonial assets due to the intertwined nature of finances over an extended period. Courts are likely to adopt a more holistic view, focusing on the overall financial landscape and contributions of both parties.

The Court of Appeal’s decision in Standish serves as a significant precedent in the realm of financial settlements upon divorce. It underscores the importance of understanding both the origins of assets and the contributions made during the marriage. By emphasising fairness and the reasonable needs of both parties, the ruling ensures a more nuanced approach to asset division, reflecting the complexities of modern marriages. For those navigating a divorce, it’s more crucial than ever to obtain comprehensive legal and financial advice to understand how such landmark rulings might affect their particular circumstances.

That’s where we can help. Alexander JLO solicitors’ specialist family team have decades of experience of dealing with high value financial settlements on divorce.

Why not call us on 020 7537 7000 or email peter@london-law.co.uk and see what we can do to assist you?

This blog was prepared by Guy Wilton on the 5th August 2024 and is correct at the time of going to press.

Guy lives on The Wirral and works in Liverpool. Guy and his team will be managing all work locally and have wide experience of acting for the firm’s clients, their family and their businesses. Guy’s experience as a lawyer started in the Northern and Welsh Circuits, including the Liverpool Courts, where he represented numerous clients as an advocate in Civil proceedings after being called to the Bar, before opting to join Alexander JLO in 2017 and qualifying as a solicitor in 2024.

Guy’s profile on the independent Review Solicitor website can be viewed here.