As the final court of appeal in the UK, the Supreme Court has a duty to focus solely on those cases which present what it describes as “the greatest public and constitutional importance” (https://supremecourt.uk/about-the-court/role-of-the-supreme-court).

In recent years, it has not been called upon to deliberate upon many divorce matters.

Although the latest figures produced by the Office for National Statistics (ONS) show that there were 103,816 divorces and dissolutions in England and Wales during 2023 (https://www.gov.uk/government/statistics/family-court-statistics-quarterly-january-to-march-2025/family-court-statistics-quarterly-january-to-march-2025), relatively few hinge on issues with the kind of broad significance as to merit the attention of the Supreme Court.

That is one reason why a new ruling is worth taking notice of (https://supremecourt.uk/cases/judgments/uksc-2024-0089).

More than merely being one of the Court’s infrequent interventions into family law, the judgement in the case of Clive and Anna Standish really may have consequences for many other couples, particularly at the moment when thousands of households are considering how best to mitigate potential exposure to higher Inheritance Tax (IHT) bills.

Mr and Mrs Standish split up early in 2020, after a marriage lasting just over 14 years.

Three years before they separated, Mr Standish, a retired executive with an international investment bank, transferred £77 million to his wife following advice that, by doing so, he could reduce the amount which he might have to pay in IHT because, as an Australian, she had non-dom status.

His intention was to have the sum eventually deposited in trusts for the benefit of their two children but the trusts were not established by the time that their marriage collapsed.

Furthermore, having retained the money, Mrs Standish argued that it should be regarded as a gift and, therefore, shared.

Mr Standish maintained that the amount transferred had been amassed before their marriage took place.

Even though his position was reinforced by the Court of Appeal, his ex-wife continued to insist that, by virtue of the transfer, the money had been matrimonialised.

The issue before the Supreme Court, then, was whether and when non-matrimonial assets should ever be counted as a joint asset and divided between former spouses.

In delivering the Court’s unanimous decision, Lord Burrows described just why the Standish case is something of a watershed.

Even though non-matrimonial property could be used to meet someone’s needs post-divorce, he said, “the time has come to make clear that non-matrimonial property should not be subject to the sharing principle”.

The possibility of it happening had been remarked on by courts before. A decade ago, for example, Mr Justice Mostyn observed that a case for justifying the sharing of non-matrimonial property would be “as rare as a white leopard”  (https://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Fam/2015/360.html&query=(JL)+AND+(v)+AND+(SL)+AND+((No)+AND+(2))+AND+((Appeal:)+AND+(Non-Matrimonial)+AND+(Property))+AND+(.2015.)+AND+(EWHC)+AND+(360)+AND+((Fam))).

Having the highest court in the land determine what is and isn’t permissible, however, makes things helpfully more clear cut.

More than simply benefitting Clive Standish, I would suggest that the outcome is a very useful reminder of the importance of spouses looking to also manage their wealth and minimise their tax bills being very careful about how they do so.

The changes to the Inheritance Tax rules announced in last October’s Budget (https://assets.publishing.service.gov.uk/media/672b9695fbd69e1861921c63/Autumn_Budget_2024_Accessible.pdf), mean that many households will be thinking of doing just that right now.

This Supreme Court decision underlines the importance of formalising the terms of any transfers of cash or other assets even more clearly to avoid the potential for dispute.

That will be most effectively done with carefully worded pre- and post-nuptial arrangements to guard against any future claim of the sort made by Mrs Standish.

In the absence of such a document, ascertaining what the original intention of a similar transfer of assets might have been would involve interpreting history, something which only the ability to travel back through time would allow anyone to do accurately.

Whilst contemporaneous letters or texts might be of help, they generally don’t carry as much weight as a pre- or post-nup.

Yet even the presence of a pre-nup is not an absolute guarantee. We should remember that nearly 15 years after another landmark ruling by the Supreme Court – in the matter of the German heiress Katrin Radmacher (https://supremecourt.uk/uploads/uksc_2009_0031_judgment_db72197d25.pdf) – nuptial agreements are still not legally binding.

As a result, the Court’s latest ruling will perhaps intensify pressure on Government ministers to determine what they intend to do about a scoping report published by the Law Commission last December on possible reform of legislation governing the financial aspects of divorce (https://lawcom.gov.uk/news/law-commission-publishes-scoping-report-on-financial-remedies-on-divorce/).