Birketts often advise clients about this issue in the context of wealth planning, when our family lawyers can assist in the preparation of pre and post nuptial agreements, working alongside private client lawyers and other professional advisers, or when a marriage or civil partnership has broken down.
There are a wide range of outcomes in relation to financial settlements on divorce and it is always useful to have indications in case law to assist in advising clients about which assets may be in the pot for division on divorce, and how a parties’ needs are to be assessed.
The case of ST v AR [2025] EWFC 4 involved a husband with significant inherited wealth, including a portfolio of properties managed (together with his brother) by a private equity investment company.
In this case, the court was asked to consider whether the husband’s inherited assets had been “matrimonialised”, and whether they should be shared as part of the financial settlement between the parties. This case highlights the court’s approach to matrimonial and non-matrimonial property following the case of Standish v Standish [2024] EWCA Civ 567 in which the court provided guidance that “the concept of matrimonialisation should be applied narrowly”.
What is matrimonial/non-matrimonial property?
Matrimonial property is property built up during the marriage and will usually include the family home (regardless of when or how it was acquired).
Non-matrimonial property is property that was acquired before the marriage, brought into the marriage from an external source by one of the parties (without any contribution from the other e.g. a gift), or inherited by one party.
In certain circumstances the characterisation of property can change from non-matrimonial property to matrimonial property because of how the property has been treated during the marriage. For example, if the assets are “mingled” with matrimonial assets, or if, for example, inherited funds are used to renovate the family home.
Pursuant to the sharing principle the parties ordinarily are entitled to an equal division of the matrimonial assets. Non-matrimonial assets are ordinarily to be retained by the party to whom they belong (absent good reason to the contrary). In practice, needs will have priority over this distinction, and needs are generally the only justification for a spouse pursuing a claim against non-marital assets (including inherited property).
This begs the questions in each case, how are needs assessed, and can needs be met without recourse to the non-matrimonial assets?
In the Family Justice Council’s guidance on financial needs it stated that in an appropriate case, typically a long marriage, and subject to sufficient financial resources being available, courts have taken the view that the lifestyle (i.e. “standard of living”) the couple had together should be reflected, as far as possible, in the sort of level of income and housing each party should have as a single person. It is generally accepted that it is not appropriate for the divorce to entail a sudden and dramatic disparity in the parties’ lifestyle. It has also been accepted in case law that needs ought to be set at a level as close as possible to the standard of living which they enjoyed during the marriage.
However, each case is fact specific, and the assessment of need is discretionary and considered against the payer’s wealth, the length of the marriage, the applicant’s age and health, the standard of living, and the source of the wealth.
In ST v AR [2025] EWFC 4 the court focused on making an assessment of the Wife’s needs, rather than the assessment and calculation of a sharing claim. The judge considered the Wife’s evidence in relation to what her needs were and considered her needs conservatively. This is indicative of the court’s conservative approach to needs when the source of wealth is non-matrimonial (and particularly inherited wealth). The court also considered the complex asset structure and acknowledged that a high proportion of the assets were illiquid, factoring in tax liabilities and investment limitation into the overall valuation of the assets. Ultimately, the court’s approach led to a moderate assessment of the Wife’s needs without recourse to the Husband’s inherited wealth which led to a division of the total assets 91% in the Husband’s favour, with 9% of the total assets being attributed in the Wife’s favour.
The Birketts view
This case shows the court’s willingness to be pragmatic in financial remedy cases, so the award is tailored to each case, taking into account the nature of the assets, the assessment of needs and the extent to which assets can be considered “matrimonialised”. Increasingly, the court seems to be taking a more conservative approach to needs when considering the interplay of needs and inherited wealth, and this may deter people from making exaggerated assessments of their needs post separation. Although it should be said, the Wife was adequately provided for in this case, as her 9% meant an award of £13.75 million.
This article does not constitute legal advice, and you should take specific advice in relation you your own situation. In particular if there is a pre or post nuptial agreement in place this may alter the advice given in any situation.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at February 2025.