“Everything Is in a Trust — Does That Mean I Get Nothing?”

It is one of the most common fears people have during a family law property settlement.

A husband or wife discovers that the family business, investment properties, shares, farm or other major assets are not technically owned by their former partner at all. Instead, they sit inside a family trust or discretionary trust.

The reaction is often immediate:

“Everything is in a trust. Does that mean I get nothing?”

For many people, it can feel as though the assets have been deliberately placed out of reach.

But a recent decision of the Full Court of the Federal Circuit and Family Court of Australia serves as an important reminder that simply placing assets in a trust does not necessarily mean they are protected from a family law property settlement.

In fact, in this case, the Court found that trusts established by the husband’s father as part of a broader family business structure could still be treated as the husband’s property for the purposes of the property settlement.

That may come as a surprise to many people.

Can a Family Trust Protect Assets in Divorce?

The short answer is:

Sometimes — but not always.

Many people assume that because assets sit inside a trust, they automatically fall outside the reach of the Family Court.

That assumption is often wrong.

The Court does not simply look at legal labels or ownership structures. Instead, it often asks a more practical question:

Who really controls the trust?

That question can become critically important.

In some cases, the Court may conclude that a trust genuinely belongs to a wider family group and should not form part of the property pool available for division between separating spouses.

In other cases, however, the Court may determine that one party effectively controls the trust and can benefit from it — meaning the trust assets may still be taken into account in a property settlement.

The difference can be worth hundreds of thousands, or even millions, of dollars.

What Happened in This Case?

The case involved a dispute between a husband and wife following the breakdown of their relationship. A central issue was whether assets held in three family trusts should be treated as part of the husband’s property for the purposes of the Family Law Act.

The husband argued that the trusts were not really his at all.

He said the wealth came from his father, that the trusts had existed for many years as part of an intergenerational family business structure and that they were intended to preserve family wealth for future generations. He also argued that the wife could not directly benefit from the trusts and that the assets should therefore sit outside the matrimonial property pool.

At first instance, the Court accepted that argument.

But the wife appealed.

And on appeal, the Full Court overturned the earlier decision.

Why?

Because when the Court looked more closely at how the trusts actually operated, it concluded that the husband had significant powers and effective control over them.

That changed everything.

Why Did “Control” Matter So Much?

One of the most important lessons from this case is that control may matter far more than technical ownership.

The Court found that the husband had substantial powers in relation to the trusts, including powers connected with appointing and removing key decision-makers and influencing how the trusts operated. He also had the practical ability to benefit from the trust structure.

Importantly, the Court focused less on whether the husband had historically exercised those powers and more on whether he had the present ability to do so.

That distinction matters.

Many people assume that because a trust was established by parents or grandparents, or because assets sit in a company or trust structure, they are automatically protected from a divorce settlement.

But as this case shows, the Court is often interested in the practical reality.

If someone effectively controls a trust and can benefit from it, the Court may conclude that the trust assets should still be treated as available property in family law proceedings.

What If My Ex Says the Trust Belongs to Their Parents?

This is another issue family lawyers hear all the time.

A person raises concerns about trust assets, only to be told:

“That’s not mine — it belongs to my parents.”

Sometimes, that explanation may genuinely be correct.

But not always.

The Family Court will often look beyond who technically established the trust and ask practical questions about how it really works.

Who makes the decisions? Who controls distributions? Who has the power to appoint or remove trustees? Who actually benefits from the assets?

In this case, even though the trusts had been established by the husband’s father and involved family wealth accumulated over many years, the Court still concluded that the husband’s powers were significant enough for the trusts to be treated as his property for family law purposes.

That finding is likely to surprise many separating couples dealing with trust structures.

Does This Mean Every Family Trust Is Included in a Property Settlement?

No.

And this is important.

The decision does not mean that every family trust or discretionary trust will automatically be included in a family law property settlement.

Trust cases are highly fact-specific.

The wording of the trust deed, who controls the trustee, the powers held by different family members and how the trust has operated in practice can all make a significant difference to the outcome.

Sometimes a trust genuinely sits outside the control of either spouse.

Other times, what appears at first glance to be a protected family structure may be much more vulnerable to scrutiny than expected.

That is why obtaining proper legal advice and carefully reviewing the trust structure is so important.

What Should You Do If You Think Assets Are Being Hidden in a Trust?

If you are concerned that assets may be sitting inside a family trust or discretionary trust, it is important not to simply assume they are beyond reach.

Documents such as trust deeds, company records, tax returns, financial statements and loan documents can often become extremely important in understanding who really controls the structure and who benefits from it.

As this case demonstrates, what matters is not always who appears to own something on paper — but who really has control.

That can make a substantial difference to the outcome of a family law property settlement.

Concerned About Family Trusts in a Divorce?

At Websters Lawyers, we regularly assist clients in complex family law property matters involving family trusts, discretionary trusts, companies, business structures and concerns about hidden or sheltered assets.

We understand how overwhelming trust structures can seem — particularly where one party has historically managed the finances or says assets are “not really theirs”.

If you are concerned that trust assets may affect your property settlement, obtaining advice early can make an enormous difference.

We offer a free initial telephone consultation to discuss your situation and your options.

Call 8231 1363 to speak with one of our experienced family lawyers.

Caldwell & Caldwell [2026] FedCFamC1A 81