Trusts, Family Businesses and Property Settlements: Will Trust Assets Go in the Pool?

Sorting out finances at the end of a relationship is hard enough without the added complexity of trusts, companies and intergenerational businesses. The recent decision of Caldwell & Caldwell [2025] FedCFamC1F 506 offers clear guidance on when trust assets will and won’t be treated as “property” under s 79 of the Family Law Act 1975 (Cth).

Key points at a glance

• The Court’s first job under s 79 is to identify the property of the parties. Only then can it decide what is just and equitable.

• Control and capacity to benefit are the touchstones. If a spouse effectively controls a trust or can cause distributions to themselves, trust assets are more likely to be treated as “property”.

• Without the control of the trustee-whether direct or indirect-and a power to benefit by distributions to one or other of the spouse-parties, there is little prospect, if any, of successfully arguing the trust assets are property for the purposes of s 79.

Case study (in brief)

• A couple separated in early 2022 after a 30-year marriage and divorced in 2023.

• Excluding trusts and companies, the matrimonial asset pool was already substantial—$16m to $22m.

• The dispute centred on three discretionary family trusts and several companies tied to an intergenerational family business founded by the husband’s great-grandfather, built over four generations, not by the couple’s efforts.

• After the husband’s father died, control at a high level passed to the husband and his two siblings as co-Appointors (able to appoint/remove trustees).

• The husband had never received distributions and could not unilaterally direct the trustee.

• The wife was never a beneficiary and was expressly excluded during the marriage.

Outcome: The Court did not treat the trust/company assets as “property” of the parties. The trusts were for lineal descendants, the parties already had a very large personal pool, and there was no evidence of distributions or practical control justifying inclusion. The huband’s father’s succession planning (including his Will and structured transfer of control) was key in protecting those assets.

The outcome might have been different if, for example, the husband had been the sole Appointor (indicating sole control) or if the wife had not been excluded as a beneficiary and there was a history of distributions to her or the husband.

How the Court looks at trusts in family law

Whether trust assets are “property” is fact-specific. The Court considers:

• Trust deed terms and the trust’s purpose;

• The origin of the assets (who funded and how);

• The spouse’s degree of control over the trustee (direct or indirect), including Appointor powers;

• Any power to distribute capital or income to a spouse;

• The history of dealings and benefits (were trust assets treated like family assets?); and

• Whether, but for the trust, the assets would plainly belong to one or both spouses.

Important: Just because a trust doesn’t form part of the pool, it may still be a financial resource and therefore relevant to the division of assets. In practice, that means the Court can adjust percentages to reflect one party’s access to trust benefits.

What this means for you

If you’re separating and your family has trusts/companies:

• Expect close scrutiny of who actually controls decisions and who has benefited over time.

• Gather the trust deed (and variations), company records, resolutions, distribution statements and related financials.

• Be prepared that even if trust assets stay outside the pool, they may be treated as a financial resource, affecting the overall split.

If you’re from a family with intergenerational wealth:

• Sound succession planning matters. Clear appointor structures, independent trustees, and appropriate exclusion of non-lineal beneficiaries can help maintain asset protection.

• Testamentary and family trusts can preserve inheritances and reduce exposure to relationship claims when properly structured and administered.

How Powell Family Law can help

We regularly act in complex property matters involving trusts, companies and family businesses. We can:

• Map your structure (trusts/companies/appointor roles) and explain in plain English how it may be viewed by the Court;

• Build a disclosure and evidence strategy focused on control, benefit and practical use;

• Advise on realistic outcomes (property v financial resource) and negotiate tailored settlements; and

• Coordinate with your estate-planning advisers so your structures and succession plans align with your long-term goals.

Make your first meeting count by booking a confidential strategy meeting with Powell Family Law (Brisbane & Gold Coast). Please bring your trust deed (and any variations), company documents, last 3 financial statements and notices of assessments and tax returns. To schedule, call 07 3179 6680, email hello@powellfamilylaw.com.au, or contact us via our website.