“Not mine, not yours, not ours?” – Trusts, family wealth and the boundaries of property in family law

In the recent decision of Caldwell & Caldwell, the Federal Circuit and Family Court of Australia grappled a vexed issue: when can assets held in discretionary trusts be considered “property” of a marriage?

I have control, so what?

In Caldwell, the wife sought a declaration that three family trusts—established and controlled by the husband’s late father—were property of the marriage under section 79 of the Family Law Act. She argued that the husband’s control over the trusts, including his power to remove trustees and appoint himself or others, meant the assets should be treated as matrimonial property.

The trusts in question held substantial assets accumulated over four generations of the Caldwell family. The husband had acquired extensive powers following his father’s death, including the ability to remove trustees and appoint replacements.

The husband asserted that, regardless any control he might have, the trusts do not fall within the definition of "property" in the Family Law Act and therefore should be excluded from the asset pool.

Are the broader family trusts matrimonial property?

Ultimately, the Court found that despite the husband's powers, the trusts were not matrimonial property.

Justice Carew emphasised that while control and the power to benefit are relevant considerations, they are not determinative. The Court must also consider the origin and purpose of the trust, the conduct of the parties, and whether the trust assets would also be regarded as matrimonial property. Fiduciary obligations also play an important role.

The judgement navigates through the complex interplay between control, beneficial interest, and the statutory definition of “property” under section 79 of the Family Law Act.

Takeaways

Caldwell provides a timely reminder that control does not equal ownership, and that discretionary trust structures—particularly those with intergenerational purposes—require careful scrutiny.

The team at Lander & Rogers are experts in navigating through complex asset holdings, including corporate structures and third party interests. If you need assistance navigating these issues or perhaps consider a review of asset protection strategies, please contact a member of our Family & Relationship Law team for advice here.