Thinking About Divorce? How courts decide divorce settlements in 2026

Article Summary

1. The Supreme Court has clarified pre-marital wealth rules. In Standish v Standish [2025] UKSC 26, the Supreme Court ruled that assets brought into a marriage do not automatically become shared matrimonial property. The sharing principle applies only to wealth built during the marriage. This landmark decision means couples with significant pre-marital assets should take specialist advice and document their intentions clearly in a pre-nuptial agreement.
2. Equal sharing remains the starting point in long marriages. The High Court case of ED v AP [2025] EWFC 399 involved a 28-year marriage with assets exceeding £10 million. The wife was awarded the family home plus a substantial lump sum, illustrating that courts will divide wealth accumulated during the marriage on a broadly equal basis, with particular weight given to housing needs and the contributions of a homemaking spouse.
3. Major government reform is on the way. In November 2025, the government announced its most significant consultation on family law since the 1970s. Issues under review include legally binding pre-nuptial agreements, rights for cohabiting couples, and protection for domestic abuse victims in financial proceedings. Legislation could follow as early as 2027 or 2028.
4. The family courts are under severe strain. Average waiting times from application to final order reached 74 weeks in early 2025. Financial remedy applications rose 66% in 2024, and sitting days are being cut due to a shortage of judges. Couples face prolonged uncertainty as the system struggles to keep pace with demand.
5. A two-tier justice system is emerging. Wealthier couples are increasingly bypassing the public courts in favour of private Financial Dispute Resolution hearings and arbitration, where a specialist (often a senior barrister or retired judge) provides a faster resolution for a fee. Legal experts warn this creates a system in which speed and flexibility are available only to those who can afford them.

The law moves slowly. For decades, couples in England and Wales have managed divorce financial settlements with the same basic rulebook, a dusty tome from 1973, in the form of the Matrimonial Causes Act, that predates smartphones, the internet, and modern ideas about partnership. Goodness, in the UK at least, second-wave feminism was just kicking off!

However, in 2025, family law began to shift. The Supreme Court handed down a judgment that rewrote the rules on pre-marital wealth. A High Court judge made an award that showed how far equality has come. The government announced reforms that could fundamentally change cohabitation law. And behind it all, the court system itself started to buckle, pushing couples toward private solutions that only the wealthy can afford.

This is the story of a legal system in transition, told through the cases that define it and the policies that will shape it for years to come.

How courts decide divorce settlements in 2026

The £77 Million Question

Standish v Standish [2025] UKSC 26

When the Standish family arranged their finances, they had no idea they were setting up a legal test case that would echo through every divorce court in the land. The husband had transferred £77 million into trusts before marriage, a move designed for tax planning rather than matrimonial sharing. Years later, when the marriage ended, his wife argued that this wealth had become part of their shared life.

The Supreme Court disagreed.

In July 2025, the justices delivered a judgment that brought welcome clarity to a murky area of law. They ruled that assets brought into marriage do not automatically become shared property. The sharing principle, they explained, applies only to what a couple builds together. Pre-marital wealth remains separate unless there is clear evidence that both parties intended to treat it as joint.

Lord Justice Moylan explained:

In my view, it is clearly established that, in the application of the sharing principle, the source of an asset is the critical factor and not title. It can be seen from the cases cited above that title does not feature as a significant factor in contrast to the “source” of an asset which features prominently in explaining the court’s approach to the application of the sharing principle and, in particular, the different approach to an asset which is the product of the parties’ endeavours, namely matrimonial property, and property which is not. As submitted by Mr Bishop, the sharing principle is founded or based on each party, in accordance with the objectives of fairness, equality and non-discrimination, being entitled to an equal share of their matrimonial property, namely the “fruits of the partnership” or the wealth built up by the parties’ endeavours during the marriage.

Following the decision in Standish, Family Law Solicitors must advise clients bringing independent wealth into a marriage to explicitly document their intentions on whether the assets should be viewed as matrimonial property in the Pre-Nuptial Agreement. And financially weaker spouses looking to claim 50% or more of non-matrimonial property will need to be given a realistic picture of the portion they are likely to be able to claim.

A Home and £3.4 Million

While the Supreme Court clarified the rules on old money, the High Court showed how the system treats wealth accumulated during marriage. The case of ED v AP  [2025] EWFC 399 involved a couple who had spent 28 years together, raising four children and building assets worth over £10 million.

His Honour Judge Edward Hess faced a familiar question: how do you divide a life? His answer reflected modern expectations of equality. He awarded the wife the family home, valued at nearly £7 million, plus a lump sum of £3.4 million. He gave her half of the future payments from two funds and a third from a third fund, reasoning that this portion reflected work done before and after separation. He ordered her to take responsibility for 35% of the loans secured against the family home.

The judgment mattered not for its novelty but for its scale. It showed that in long marriages, the starting point remains equal sharing. It demonstrated that courts will make complex orders dividing future assets to achieve fairness. And it confirmed that housing needs carry particular weight, especially for the partner who made the home their domain.

The Government Wakes Up

On 10 November 2025, Baroness Levitt KC stood in Parliament and announced something Family Law Solicitors had waited years to hear. The government would launch a comprehensive consultation on family law reform, the most significant since the 1970s.

The consultation will tackle questions that have troubled judges and couples for decades. Should pre-nuptial agreements be legally binding? How should the law treat cohabiting couples, who currently have no automatic rights? How can the system better protect victims of domestic abuse in financial proceedings? And how can we reduce the uncertainty and conflict that the current discretionary framework creates?

It seems the British Government has finally recognised that modern families take on many forms. The consultation, expected early 2026, could lead to legislation by 2027 or 2028. For the 3.6 million cohabiting couples in England and Wales, this represents a glimmer of hope after years of legal limbo.

Crisis in the Family Court

Behind the high-profile cases and policy announcements, a quieter catastrophe has been unfolding. The family courts are running out of time. In December 2025, Sir Andrew McFarlane, President of the Family Division, announced that sitting days would be reduced. The reason is simple: there are not enough judges to go round.

The statistics tell a stark story. In the first quarter of 2025, couples waited an average of 74 weeks from application to final order. Financial remedy applications rose 66% in 2024, the highest level since the 2008 financial crisis. The courts processed 11,868 applications in the third quarter of 2024 alone, a 7% increase on the previous year.

The result is a system that cannot keep pace with demand. Hearing dates are moved at short notice. Trials are delayed by months. Couples who cannot afford alternatives find themselves in limbo, their lives on hold while they wait for a judge to become available.

The result is the beginning of the end of equal access to justice. Wealthy couples are increasingly ‘by-passing’ the public court in favour of private Financial Dispute Resolution hearings and arbitration. In these processes, parties pay an independent specialist, often a senior barrister or retired judge, to deliver a neutral evaluation or a binding decision, thereby avoiding the extensive public court backlogs.

Legal experts and practitioners have explicitly warned of a ‘two-tier’ system emerging. Those with the financial means can ‘buy’ a faster, more flexible resolution, while those without means must wait for the overstretched public courts to deal with their case.

If you want to discuss any points made in this month’s post, you can email me at mandi@purcellsolicitors.co.uk

Please note that this article does not constitute legal advice.

Author Biography

Mandi Austin is a Director and Family Law Solicitor at Purcell Solicitors, with over 25 years of specialist experience in family law.​

She advises on the full spectrum of family law issues, including divorce, complex financial settlements, children matters, pre‑ and post‑nuptial agreements, and non‑legal aid domestic abuse cases. Mandi originally chose law after a lecturer identified her potential and encouraged her to pursue a law degree, and she has focused on family work ever since.​

Mandi is a trained Collaborative Lawyer and has extensive experience representing clients in family court proceedings as well as in out‑of‑court negotiations. She is ranked Band 2 for Family/Matrimonial in the Chambers & Partners UK Guide 2026, where she is praised as “meticulous and very thorough with her preparation,” “incredibly competent,” and “a delight to work with” who “provides spot‑on advice”.