The Supreme Court decision in Standish vs Standish has been described as the most significant ruling on the law relating to finances and divorce in nearly 20 years.
It is a judgment that will have implications for family law practice and wealth planning alike, particularly for high-net-worth individuals and their advisers.
At its heart lies a deceptively simple question: when does non-matrimonial property become matrimonial?
The facts of Standish: tax planning, trusts and a transfer
The case concerned a long marriage between Clive Standish, former chief financial officer of UBS, and his second wife, Anna Standish.
They both had children from previous marriages, and went on to have two more children together during their marriage.
In 2017, Clive Standish transferred nearly £78mn of assets into Anna Standish’s name.
The bulk of these assets had been built up from his career in banking before he and Anna Standish began their relationship, with a smaller portion attributable to his earnings during their relationship.
The transfer was part of an inheritance tax planning exercise, designed to take advantage of Anna Standish’s non-domiciled status.
Clive Standish had been advised that, provided he transferred his assets to Anna Standish before he became “deemed domiciled”, the assets would escape UK inheritance tax.
The plan was for Anna Standish to settle the assets into discretionary trusts in Jersey for the benefit of their children once a suitable period of time had elapsed.
The trust deeds were drafted, but the trusts were never established and, when the parties later separated, Anna Standish still held the assets in her name.
By the time the case came before the High Court in 2022, the assets that Clive Standish had transferred to Anna Standish had grown in value to £80mn.
The key question was whether they should be shared between them both — had the £80mn become matrimonial property?
Journey to the Supreme Court: largest ever reduction of a divorce award
The first instance judge, Mr Justice Moor, held that the transfer of the £80mn into Anna Standish’s name had the effect of matrimonialising the assets.
He concluded that all of the transferred assets were subject to the sharing principle, however, he awarded Anna Standish a 40 per cent share on the basis that the source of the wealth was overwhelmingly Clive Standish.
This resulted in an overall award of £45mn to Anna Standish, factoring in other assets which the parties owned, while Clive Standish was left with £87.6mn.
Both parties appealed.
The Court of Appeal took a different view, finding that Mr Justice Moor had placed undue weight on the transfer of legal ownership from Clive Standish to his wife, and insufficient weight on the origin of the assets.
The source of the assets, rather than title, was determinative, according to Lord Justice Moylan.
The Court of Appeal found that 75 per cent of the £80mn that had been transferred to Anna Standish remained non-matrimonial and should revert to Clive Standish.
