A Fairer End to Relationships? Some Reflections on the Core Principles of the Government’s Proposals to Reform the Law of Financial Remedies on Divorce.

In June 2026, the Ministry of Justice published ‘A fairer end to relationships’, an unusually wide-ranging consultation considering reforms to the law of financial remedies on divorce, and to the position of cohabitants on relationship breakdown and on death. Graham Fraser has summarised the consultation here.

This piece focuses on the central principles of the proposed reforms to financial remedies law: a starting point of sharing matrimonial property, with the possibility of a departure from an equal division where this is required to meet needs. There are two reasons for this narrow focus. The first is a lack of space to consider every potential issue with the proposed scheme. The second is more pragmatic. Law reform in this area is important. This is particularly true in relation to the law relating to cohabitants, where the current lack of protection is highly problematic, and to the law relating to pre-nuptial agreements where, as Sharon Thompson has convincingly argued, there is a real need for legislative safeguards.^[1] For these reasons, this piece focuses on some of the most pressing concerns with the central elements of the proposed scheme, rather than identifying every issue or proposing an alternative model. This does not mean that there are not merits in doing those things.

1. Sharing first

The consultation suggests that ‘the court should consider the sharing principle as the starting point and consider the needs principle where equal sharing would not allow needs to be met’.^[2] There is some suggestion that this reflects the current starting point in legal practice,^[3] although case law is not definitive on this. For example, in Miller v Miller; McFarlane v McFarlane [2006] UKHL 24 at [144] Baroness Hale suggested that there should not be a ‘hard and fast rule’ about the starting point and in White v White [2000] UKHL 54 Lord Nicholls explicitly rejected a starting point of equal sharing because it ‘would carry a risk that in practice it would be treated as a legal presumption, with formal consequences regarding the burden of proof’.

Symbolically, there is merit to a starting point of sharing first. It helps to reinforce the idea that a claimant is not a ‘supplicant’^[4] and that their claim is grounded in entitlement. Further, in big money cases, the very purpose of the yardstick of equality introduced in White was to move away from an approach whereby the claimant spouse had their needs met and the other spouse retained the rest. However, I share Lord Nicholls’ concerns in White about a starting point of equal sharing for two reasons.

First, most cases are not big money cases and most people do not have legal advice.^[5] Even though the statute makes no mention of sharing at the moment, there is evidence that people wrongly understand 50:50 to be the guiding principle in this area^[6] and that this shapes the settlements people reach.^[7] Therefore, there seems to be good reason to think that an explicit starting point of sharing will reinforce these beliefs in the future. In the majority of cases, which focus only on needs, the danger is that if people simply divide their assets equally it will leave children and their primary carers without enough to meet their needs.

These dangers are compounded by the fact that the starting point is an equal sharing of matrimonial property only. I will consider the issue of matrimonial and non-matrimonial property further in the next section but simply note the challenges for those without legal advice. For example, will litigants in person appreciate that a matrimonial home brought into the relationship by one party is matrimonial property? If they do not and it is the only asset, the net effect may be that there will be no division of assets at all.

A second reason to be concerned about a starting point of equal sharing is that it might place a burden on the claimant to show that an equal share of matrimonial property would not meet their needs. In some cases, this might make claims more difficult. In others, it might discourage claims at all.

2. Standish and matrimonial property

The consultation proposes that the distinctions between matrimonial and non-matrimonial property should be codified ‘in line with the Supreme Court’s decision in Standish’.^[8] There are several problems with this approach.^[9]

First and foremost, questions remain about what Standish actually decided. On the issue of matrimonialisation, for example, one interpretation is that the case has made it harder to show that property has been matrimonialised but that once matrimonialised property should be shared equally.^[10] However, the post-Standish first instance case law is divided on this.^[11]

A second problem with Standish is that the judgment does not engage with the difference between the approaches of Lord Nicholls and Baroness Hale in Miller; McFarlane. Lord Nicholls at [23] suggested that non-matrimonial property comprised that which ‘the parties bring with them into the marriage or acquire by inheritance or gift during the marriage’. Baroness Hale’s wider approach at [150] suggested that ‘business or investment assets which have been generated solely or mainly by the efforts of one party’ might also be non-matrimonial property.

While Lady Hale’s approach was followed in Sharp v Sharp [2017] EWCA Civ 408, a case involving a short marriage of a dual career couple with no children, Charman v Charman [2007] EWCA Civ 503 and XW v XH [2017] EWFC 76 considered it potentially discriminatory. Standish does not address this issue and the definitions provided in the case offer no further guidance. For example, the definition of matrimonial property at [7] as ‘assets that are earned or gained during the course of, and as a result of, the marriage’ and at [47] ‘property that comprises the fruits of the marriage partnership or reflects the marriage partnership or is the product of the parties’ common endeavour’ echoes Lady Hale. However, the description of non-matrimonial property at [7] as ‘assets which each spouse owned in his or her own right prior to the marriage, or by inheritance or gift’ and, later at [47], as ‘typically pre-marital property brought into the marriage by one of the parties or property acquired by one of the parties by external inheritance or gift’ seems more akin to Lord Nicholls’ approach.

A third issue with the Standish approach to matrimonialisation (at [52]), which ‘rests on the parties, over time, treating the asset as shared’ is the potential impact in cases of domestic abuse and in relation to pensions. The very nature of a coercive and controlling relationship may be that a party has been denied access to assets, making it impossible to establish matrimonialisation. When it comes to pensions, following BS v HC [2026] EWFC 20, matrimonialisation will rarely apply. However, in very many cases, pensions may be the single biggest asset a family has.

A fourth issue is the bald statement in Standish that transfers to save tax do not generally indicate an intention for an asset to be shared. While understandable in a case such as Standish where the transfer was to save inheritance tax for the parties’ children, this is more concerning as a general principle. The possibility of tax savings only exists in such cases because the parties are married. It isn’t self-evident that the fiscal benefits of marriage should accrue only to the financially stronger party.

Finally, there are issues to consider relating to the burden of proof in this context. Does the claimant have to show that property is matrimonial to make a claim to it or does the party seeking to exclude property have to show that it is non-matrimonial? If the former, claims by the financially weaker party will become increasingly difficult to establish.

3. The complexity of needs

The consultation paper suggests a three-stage hierarchical approach to needs as follows^[12]

• ‘Stage 1 – children’s needs come first’^[13]
• ‘Stage 2 – Consider divorcing couples’ capital and income needs, including their housing and pension needs’^[14]
• ‘Stage 3 – Consider discretionary needs’^[15] (considered to be ‘lifestyle luxuries’)^[16]

This three-stage hierarchy seems more likely to obfuscate than clarify the law in this area and may undermine the claims of the financially weaker party. For example, the idea that children’s needs come first echoes s 25(1) of the Matrimonial Causes Act in which minor children’s needs are the first consideration. However, the slight change in emphasis may have unintended consequences. For example, might it suggest that children’s school fees rank above parent’s housing needs? One would hope that would be unlikely if the result is that parents would not be able to rehouse, but what about if school fees are affordable if parents rehouse much more modestly and rein in their spending significantly?

Further, as Sharon Thompson points out,^[17] luxuries are very much relationship specific. What is a luxury for one couple may be an everyday expense for another. Currently, needs are interpreted according to lifestyle. Is there a danger that separating out discretionary needs will break the link with the marital standard of living and encourage a much more restrictive view of what needs encompass?

While my focus here is on financial remedies, it is also worth considering the role of needs in different areas of the Government’s proposed scheme. The concept of needs is central to the proposed scheme for cohabitants – they can apply for needs-based awards based on Stages 1 and 2 only – and to the proposals for qualifying nuptial agreements, under which needs would be assessed on the same basis as for cohabitants. Currently, cohabitants can bring claims under Schedule 1 of the Children Act 1989. Whilst such claims are for the benefit of children, case law recognises the possibility of an indirect benefit to the claimant which might reach the level of discretionary needs. For example, in Re P (Child: Financial Provision) [2003] 2 FLR 865 at [81] it is suggested that there might be needs which do not directly benefit the child but ‘which would indirectly promote the mother’s care of the child by allowing her such a lifestyle as not to feel “out of place” in the society of the parents of the child’s friends’. If the effect of separating out discretionary needs is to place downward pressure on needs awards, might the result be a greater number of Schedule 1 claims for both married couples and cohabitants?

4. An alternative vision

The very real danger that a starting point of sharing might result in needs not being met necessitates a different approach. Beginning with needs would better address the reality of most cases where there is no legal advice and in which an equal division of assets (whether matrimonial only or all assets) will not meet both parties’ needs. Given the potential complexity of a threefold hierarchy of needs, a better approach might be to continue to assess needs according to the marital standard of living. This approach could also apply in the case of pre-nups and cohabitation. This would not undermine the Government’s desire to maintain a distinction between cohabitation and marriage because the sharing principle would not apply to cohabitation (or to pre-nups).

This does raise the spectre of a return to the pre-White ‘reasonable requirements’ approach in bigger money cases. It is, therefore, important to think about how the sharing principle might then be applied to address this. Jo Miles gives the following illustrative example:

‘Suppose an asset pool of 200 units. Suppose party A has needs of 30 units and party B of 70 units. On a “meet needs and then share surplus equally” approach, A would receive 80 units and B 120. On the “equal sharing and then modify if needs require” approach, A and B would each receive 100 units.’^[18]

Miles suggests that the need principle cannot justify the former approach but seems to accept that the need for compensation might. The consultation proposes retaining the compensation principle via the s 25 factors, inserting an ‘explicit reference to any disadvantage suffered as a result of the relationship’.^[19] While this does seem to be a lost opportunity to embrace the more holistic approach to compensation suggested by Lucy Crompton,^[20] some role for compensation is preferable to the current approach of sidelining it altogether.

What then of the role of matrimonial and non-matrimonial property in the new law? There is an argument that definition of these terms is not required. In the minority of cases in which the distinction is relevant, the parties are most likely to be able to afford legal advice and the assets in question are more likely to be complex and defy easy categorisation. Given the risks identified above, of non-matrimonial property being mistakenly given weight by litigants in person in cases where the assets are insufficient to meet needs, this might be a reason to steer clear of definition. However, there is a powerful argument that the law should be accessible to everyone, whether or not they can afford legal advice. Therefore, if definition is favoured, perhaps the solution is a checklist of additional factors to be applied only in cases where there is a surplus of assets once needs are met. This checklist might include direction on how to deal with matrimonial and non-matrimonial property in such cases.

Taken together, these changes might address some of the biggest pitfalls of the proposed scheme, whilst retaining the essence of the central principles.