Derek Goldsmith, 62, of Crockham Hill, Kent, was acquitted of murder and conspiracy to murder Diana Goldsmith, 44, in January 1995.
Counsel for the prosecution told Maidstone Crown Court that Mr Goldsmith hired a hitman to murder Ms Goldsmith in 1994 to gain "care and control" of their two children after he lost a custody battle. Her remains were found in 1997.
A key prosecution witness, Mr Goldsmith's former son-in-law Michael Fitzpatrick, a convicted armed robber, had admitted conspiracy to murder Ms Goldsmith. But before the case, the prosecution agreed to enter a not-guilty verdict for Mr Fitzpatrick on a charge of murdering Ms Goldsmith, despite evidence that he could have committed the crime himself.
The judge told the jury to find Mr Goldsmith not guilty, saying it was "unsafe" to continue the trial. He said: "The prosecution have to accept that the jury would be entitled to reject the explanations which Michael Fitzpatrick has tended in the witness box and thus conclude that Michael Fitzpatrick did, or may have, murdered her."
Mr Goldsmith was arrested after Mr Fitzpatrick, 37, a scrapdealer from Bromley, south-east London, told police on 3 July last year that Mr Goldsmith paid pounds 20,000 to Ian Colligan to kill her. Colligan committed suicide in prison.
Mr Fitzpatrick admittedburying the body in a friend's garden in Bromley. He had told his friend that he was burying 50kg of cannabis.
Bridget Petherbridge, solicitor for Mr Goldsmith, said later: "He has maintained his innocence throughout and he is delighted with the verdict."
Ms Goldsmith, who was living in Sevenoaks, was last seen taking her children to school on 25 January 1995.
She had cohabited with Derek Goldsmith from 1979 to 1991 and had taken his surname, although they were never legally married.
When the relationship broke up in 1991 there was a dispute over care and control of their son, which was resolved in favour of Ms Goldsmith in a lengthy and bitter hearing in the High Court in 1992. Mr Goldsmith launched an appeal but later abandoned it.
According to Mr Fitzpatrick, Ms Goldsmith was abducted from her home on 25 January 1995 by Colligan and another man, who drove to her house in Sevenoaks. Colligan was said to have driven off with Ms Goldsmith, whose badly decomposed body was found two years later.
The court was told that Mr Goldsmith had been "obsessed" by the struggle with Ms Goldsmith over the custody of his son and daughter.