Finances on divorce: flexibility or formula?

Insight

30.01.2026

Fairness has long been the guiding principle of financial remedies on divorce in England and Wales. Yet what fairness means in practice is far from straightforward. The Matrimonial Causes Act 1973 (the Act), which governs financial provision on divorce, is now over 50 years old. In December 2024, the Law Commission published its scoping paper on reform[i], setting out various options that could reshape the landscape for families and advisors. The UK government has announced that it will issue a consultation on reforming financial remedies law by spring 2026. For private client and trust practitioners, this raises important questions about what reform might mean for wealth protection, intergenerational planning and the treatment of vulnerable clients.

Why reform and why now?

The current law gives judges wide discretion to achieve fairness, guided by a list of factors set out in the Act, including the parties' resources, earning capacities, financial needs, the duration of their marriage and the standard of living enjoyed. Although this flexibility allows for bespoke solutions, critics argue that it also creates uncertainty. Outcomes can vary depending on judicial interpretation, making it difficult for advisors to predict results and for parties to agree settlements.

The Law Commission has identified several models of reform, including a more formulaic approach to financial provision. This could introduce fixed rules on asset division and the duration and quantum of spousal maintenance, similar to those in many continental jurisdictions. For practitioners, the challenge will be anticipating how reforms will impact wealth planning strategies for their clients.

Modern families and vulnerable clients

Although greater clarity is welcome, a more rigid framework risks tying judges’ hands and failing to accommodate the infinite variations of modern family life. It is precisely because the Act affords judges significant discretion that it has endured for 50 years; during that time, key principles from case law have evolved significantly, reflecting wider societal changes.

A shift towards a more rigid system could have particular implications for blended families, those with dependants from previous relationships and the most vulnerable in society. Formulaic models risk overlooking more nuanced situations. A statutory time limit on the duration of spousal maintenance, as already exists in Scotland, could prejudice those with exceptional needs resulting from incapacity or long-term health issues. There will always be outlying cases where the circumstances justify an award outside the usual bracket.

For those remarrying, or marrying later in life, there could potentially be a silver lining if any reforms strengthen protections around any pre-acquired wealth. Under the current law, a pre- or post-nuptial agreement is essential protection in those circumstances. A more robust set of rules around pre-acquired assets could reduce the risk for those who have failed to enter a nuptial agreement, although for high-net-worth clients these agreements will always remain a key planning tool.

Trusts, inherited wealth and nuptial agreements

Trust structures have long been a feature of wealth planning, but they are not immune from scrutiny in divorce proceedings. The Family Court has historically looked beyond the legal form to the reality of control and benefit on the ground. Case law has confirmed that interests in family trusts and other inherited wealth are ‘non-matrimonial’ property and not subject to sharing. However, following the Supreme Court’s decision in Standish v Standish in 2025[ii], there remains ambiguity around when such assets become ‘matrimonialised’, for example where a couple have shared use of the assets during their marriage. Clarifying this issue will be critical for private client advisors.

Reform could also codify the law on pre- and post-nuptial agreements, bolstering their status. In practice, however, pre- and post-nuptial agreements already offer strong protection, provided both parties have received independent legal advice, full financial disclosure has been given and the agreement meets both parties' financial needs

Pressure on the justice system

Reform does not occur in a vacuum. The family justice system is under severe strain, with delays affecting both financial proceedings and cases involving children. Vulnerable clients often bear the brunt of these pressures, facing prolonged uncertainty at a time of emotional and financial fragility. Although the Law Commission’s proposals aim to simplify outcomes, implementation will require significant resources and judicial training. In the short term, reform is likely to worsen the backlog in the court system. This will be exacerbated if the courts are simultaneously dealing with a wave of applications under a new statute giving cohabiting couples greater financial rights, the UK government having announced that it plans to consult on both issues at the same time. Alternative dispute resolution, such as mediation, arbitration and private financial dispute resolution, will remain vital for clients seeking timely solutions.

Looking ahead

The coming consultation marks a pivotal moment for family law. Private client advisors must stay ahead, working closely with family law specialists to ensure that structures and strategies remain resilient in a changing legal landscape.

[i] Law Commission No. 417 Financial remedies on divorce and dissolution: A scoping report

[ii] [2025] UKSC 26