In brief:
- The Law Commission is set to review the divorce finance framework, which is over 50 years old, amid concerns it no longer reflects how courts actually make decisions today.
- Proposals are likely to address key tensions, especially whether the system should favour certainty over flexibility in dividing assets.
- Binding marital agreements, potential support for adult children, and clearer rules could significantly reshape financial outcomes on divorce.
53 years and still going strong? To those who practice in family law, there are times when the provisions of the Matrimonial Causes Act 1973 ("MCA") might seem like they have always, and will always, be in place. But change is on the way. The Law Commission is expected to imminently publish a consultation on proposed reform to the Act and to the practice of dividing up a couple's assets on divorce. While the aim of the legislation, "fairness", tends to be very much in the eye of the beholder, some matters may be of particular interest not only to couples contemplating divorce, but to those advising families on wealth preservation strategies.
The Matrimonial Causes Act and the case for reform
When determining the division of assets on divorce, the Family Court is directed to s.25 of MCA, which gives judges a wide discretion. After giving first consideration to the welfare of any child under the age of 18, the court must consider a checklist of factors including resources, needs, standard of living, age, duration of the marriage, contributions, and (rarely) conduct. In practice the court carries out a two-stage approach – the first is "computation", whereby the court ascertains what the available assets, incomes and pensions are, and the second is "distribution", where it determines what, if any assets or income should be transferred from one spouse to the other.
While the framework provided in the MCA has remained largely unchanged, the court's approach has been shaped by decisions of the higher courts, leading to a situation identified by the Law Commission in a 2024 scoping report, where the legislation alone no longer explains how outcomes are actually reached. The principles of need, compensation and sharing, articulated by the Supreme Court in the 2006 decisions of Miller v Miller, McFarlane v McFarlane, and its more recent decision in Standish v Standish largely define the court's approach to cases, but of the three principles only need actually appears in the Act. The scoping report noted that this results in a system that works reasonably well for specialist practitioners, but lacks accessibility for those without such representation.
The 2024 scoping report
In December 2024, the Law Commission published a scoping report, considering whether reform was necessary, but without making actual proposals for that reform. It identified four models of reform: codification, which would essentially replicate the current approach in statutory form, through "codification-plus", guided discretion, and a default regime akin to those found in some continental European countries, which would significantly reduce any discretion left to individual judges.
The scoping report further suggested that matters such as the enforceability of nuptial agreements, financial provision for children beyond the age of 18, conduct and whether spousal periodical payments should be limited should be considered in any future consultation. In late 2025, the government announced that a consultation on reform to both the law on financial remedy and the law in respect of cohabiting couples would be released in Spring 2026.
Three things to look for in the forthcoming consultation on reform to financial remedy
- The Law Commission's stance on certainty vs flexibility. One of the criticisms within the scoping report was of the lack of certainty built into the current discretionary system, which leads to more litigation, as spouses are unable to achieve clarity as to what is likely to happen to their finances on divorce. A more rigid regime, such as those seen in several continental European countries, would lead to greater certainty, reducing litigation and allowing couples to plan for life after divorce. On the other hand, the flexibility of the current system has often been considered a benefit, with a Nuffield report "Fair shares? Sorting out money and property on divorce", in 2021 considering that current broad discretion, allowing financial arrangements to meet the individual circumstances of each couple, appears both appropriate and necessary
- Enforceability of nuptial agreements. While parties can be held to a properly entered into nuptial agreement, provided its provisions are "fair", nuptial agreements are not currently automatically binding in this jurisdiction, and the question as to whether parties should be held to them remains a frequent source of litigation. It is anticipated that the Law Commission will recommend making nuptial agreements binding, as it did in 2014, albeit with certain safeguards for the financially weaker spouse. This development would be welcome for those looking to manage wealth within high-net-worth (HNW) families, where the prospect of a divorce among the younger generations can be a destabilising variable.
- Provision for children beyond the age of 18. At present, parents are ordinarily only financially liable for their children until they reach 18, with extended periods possible while a child remains in full-time education, or for example where they suffer from a disability. The scoping report has suggested that consideration should be given to whether courts should have wider powers to make orders for adult children of the family. While many young adults today remain in fact reliant upon their parents, the suggestion that such arrangements could be enforced is controversial, and likely to be unpopular amongst families who may quite properly consider that, however much they may want to assist their adult children, there should be no obligation to do so.