Protecting Intergenerational Wealth & Trusts from Divorce & Separation

Recently, in Caldwell & Caldwell [2025] FedCFamC1F 506, the Federal Circuit and Family Court were asked to determine whether assets held in long-standing family trusts should be treated as property of the parties for the purposes of a property settlement.

The husband came from a family that had operated a multi-generational business through discretionary trusts and companies since the early 1900’s. These trusts had been established by his late father, and their assets were primarily built up before the marriage. During the relationship with his wife, the husband worked in the family business but received little by way of distributions from the trust themselves and instead was paid a salary and benefits.

The husband and wife separated and divorced. The wife sought declarations that these trusts were effectively the husband’s property, given his role as the appointor and the powers held. The husband opposed this view by maintaining that the trusts were genuine intergenerational structures established by his late father and predecessors and were not assets created through the party's efforts during their marriage.

The Court examined whether the level of control the husband exercised over the trusts meant that it could be determined as his own. Justice Carew accepted that the husband had influence and control over the trusts but stressed that this is not decisive on its own. Factors such as history and purpose of the trusts, the absence of regular distributions to the husband, and the fact that the assets were the product of earlier generations all pointed against characterising them as property. The wife’s application for a declaration was dismissed.

Key Take Aways

• Family trusts will not be automatically brought into the property pool simply because a spouse has some level of control.

  
  

• Origins of the assets, how the trust has been administered, and whether it has historically been used to benefit the family will be considered.

  
  

• Equally, where trust assets are not treated as property, they may still influence the outcome as a financial resource.

• Families with significant wealth that are concerned about divorce and separation risks and wishing to protect intergenerational wealth, will need to seek appropriate legal advice if they wish to protect and pass down the family wealth.

PV Legal recognises the importance of ensuring intergenerational wealth is protected and provides asset protection advice for multigenerational families.

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