Matrimonial and non-matrimonial assets: Understanding the difference

This article explains the difference between matrimonial and non-matrimonial assets and why this distinction matters.

The Courts’ Approach to Matrimonial & Non-matrimonial Assets

Most family finance cases are now settled by agreement, often before or early in proceedings. However, it remains important to consider how a court would approach your case.

Negotiating on a basis that a court would not approve is unlikely to be productive.

Both parties are usually advised about the court’s likely approach, so settlements that do not reflect this are unlikely to be agreed.

The court usually follows a three-stage process.

“The 3-Step Process”

The first stage is to identify and value the assets available for distribution, this is done via the disclosure process.

You must disclose all assets, even if you think they are not matrimonial property or if you and your spouse have agreed they should remain with one party.

The second stage is to decide whether each asset is matrimonial, non-matrimonial, or a combination of both.

The court considers each asset to determine its status.

The third stage is distribution.

At this stage, the court decides how the assets should be divided.

So, Which Assets Are Matrimonial and Which Are Non-matrimonial?

Matrimonial assets are those built up through the efforts of both parties during the marriage.

Non-matrimonial assets are those brought into the marriage by one party or received as a gift or inheritance during the marriage.

The family home is usually treated as a special case. Even if one party owned it before the marriage, the court is likely to classify it as a matrimonial asset.

Sometimes, non-matrimonial assets can become matrimonial, often because they have been mixed with matrimonial assets.

The Importance of the Distinction Between Matrimonial and Non-matrimonial Assets

The distinction matters because the court usually expects matrimonial assets to be shared equally.

The sharing principle does not usually apply to non-matrimonial assets.

If an equal share of matrimonial assets does not meet the needs of the more financially vulnerable party, often the parent with care of children, the court may use non-matrimonial assets to provide for those needs.

Alternatively, the court may award a greater share of the matrimonial assets to the more vulnerable party.

Matrimonial & Non-Matrimonial Assets: Pensions

In most needs-based cases, pension assets are divided to equalise income in retirement.

In these cases, it usually does not matter whether pension assets are classed as matrimonial or non-matrimonial.

There are some cases where this distinction is relevant, such as where pensions are modest compared to other assets or the case is not needs-based.

Recent Case Law: Example

The Court of Appeal’s decision in the 2024 case of Standish v Standish is a leading case on the treatment of non-matrimonial assets, particularly about the “mingling” or “matrimonialisation” of those assets.

The case concerned a 15-year marriage with two children. At the beginning of the relationship, the husband had assets worth £57 million.

In 2017, he transferred assets worth £77 million to the wife’s sole name, with the intention that she would settle those funds into an offshore trust to avoid Inheritance Tax.

The wife failed to settle the funds in an offshore trust.

In the Court of Appeal case, the wife argued that the transfer of those assets to her converted them into her “separate property” and that they should be ring-fenced for her. Her alternative argument was that the assets were matrimonial property and should be divided equally between them.

The couple also owned a holiday property. The wife argued that property should be regarded as a matrimonial asset. Although the husband had owned it before the marriage, the family had holidayed there and had improved it during the marriage.

The husband argued that the assets transferred to the wife in 2017 and the holiday property represented his pre-marital wealth and were non-matrimonial assets that should not be available for sharing.

The court took the view that the fact that the assets had been transferred to the wife’s legal ownership in 2017 was of little importance. The source of the asset was the most important factor in deciding whether it should be shared.

The judgment acknowledged that the importance of the non-marital source of an asset may diminish over time.

The judge also took the view that the sharing principle should apply in cases where only a modest percentage of the parties’ overall wealth could be regarded as the product of non-marital endeavour.

In a situation where non-marital property was used to purchase the family home, the property should normally be shared equally.

However, when non-matrimonial property is mixed with matrimonial property, a more nuanced approach is warranted.

Usually, the evidence will not establish a clear dividing line between matrimonial and non-matrimonial property.

If such assets are treated as having been “matrimonialised” and therefore subject to the sharing principle, it will not necessarily mean that those assets should be shared equally.

The non-matrimonial source of the money would remain a relevant consideration.

Before You Go…

It is not always straightforward to decide whether an asset is matrimonial or non-matrimonial.

An asset may begin as non-matrimonial but become matrimonial, depending on the facts of the case.

In needs-based cases, the distinction is often less important. If you are unsure, contact our Family Law team at Orwins.