Are Trust Assets Property under the Family Law Act 1975 (Cth)?

It is a relatively well-established principle in family law that assets of a trust will form part of the property pool of the parties and be subject to Orders under s.79 of the Act if one or both of the parties to the marriage control the trust and have the capacity to benefit themselves from the trust.

This issue was recently considered by the Full Court of the Family Court of Australia in the case of Caldwell & Caldwell (2026) FedCFamC1A 81.

The brief facts of the case are:

• Three discretionary trusts existed at the time of trial which had been established by the husband’s family over a number of previous generations;
• Only direct descendants of the husband could be beneficiaries – which excluded the wife;
• The husband and his sons were appointors/principals of the trusts;
• The wife argued the property of the trusts could be subject to an order under s.79 of the Act, the husband argued the trusts were a financial resource available to him but were not property.

At first instance the trial Judge determined that the trust property was not property for the purpose of s.79 of the Act. Whilst the court considered a number of factors, the determining facts were that the trusts existed primarily to preserve intergenerational wealth and the husband could not directly exercise his power as appointor in a way that benefited the wife.

The wife appealed the decision to the Full Court of the Federal Circuit and Family Court of Australia.

The basis of the appeal was that the trial Judge had incorrectly considered whether the husband has historically used the trusts for his own benefit, rather than considering whether he presently had the ability to control them.

A majority decision allowed the appeal on the basis that the trial Judge had conflated two separate stages of the necessary analysis. The first task should have been to identify whether the trusts were property for the purpose of s.79 and then separately consider whether it was just and equitable for the trust assets to be adjusted.

The Full Court found that the husband had the ability to exercise control over the trusts including the ability over appointment of trustees and the ability to remove the parties children as co-appointors.

Whilst the Husband argued that he had never taken steps to assume control of the Trusts, the Court held that the issue was not whether he had done so, but whether he had the capacity to do so. The Court found that there was nothing impeding the Husband from exercising control over the trusts.

It remains the case that the ability to control a trust is a critical consideration as to whether trust property will form part of the matrimonial pool for division. Whether the Court should adjust the assets of the trust remains a separate discretionary decision for determination.

At the time of publishing, the matter had been remitted back for rehearing.

If you require assistance with Family Law, Family Law Property Settlement, Family Law Parenting matters – please contact Allison Caputo or our family law team on (07) 3778 4538.