Understanding Recent Changes in Family Asset Protection and Trusts

Protection of Family Assets & Trusts – Changes You Need to Know About

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 then divorced. The wife sought declarations that these trusts were effectively the husband’s property, given his role as the appointor and the powers held to him. 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 parties’ 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. Although, Factors of the 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 coalesced to point away from characterising them as property. The wife’s application for a declaration was dismissed.

This decision serves as an important reminder that family trusts will not be automatically brought into the property pool simply because a spouse has some level of control of those trusts. What actually matters is the origin of the assets, how the trust has been administered, and whether it has historically been used to benefit the family. Equally, where trust assets are not treated as property, they may still influence the outcome as a financial resource.

If you are separating and your family assets involve trusts, it is critical to obtain legal advice. A careful review of the trust deed and past distributions can make the difference between your trust assets becoming included in the settlement or treated as an external resource. We recognise that protecting your trust assets for your children and their descendants can be a vital concern for many, and if you are one of those people, we can help understand your position and provide the protection you desire.

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